HMRC has recently updated its guidance on what it considers to be allowable training costs. This is not currently a change in law, just a change in HMRCs view on the matter.
Historically, training costs related to learning a new skill in an individual’s existing business were considered capital costs because they had an enduring benefit to the business, meaning they were not deductible from trade profits for tax purposes. This is in contrast to courses related to refreshing or updating an existing skillset, which were deductible.
HMRC now say that they consider training costs related to learning a new skill in a new area incurred wholly and exclusively for ‘ancillary purposes’ of the trade or business are deductible
There are various examples listed when relief may and may not apply, with relief ‘likely’ to be available on costs such as; courses related to changes in technology/practices in veterinary business, bookkeeping training to help keep accurate accounting records (i.e. Xero, Sage) and even website development in certain cases.
A key distinction highlighted is that the costs must still relate to an existing business e.g. initial courses taken to enable someone to start a new business that does not already exist would still not be deductible.
Ultimately, the rules are still open to interpretation and as is often the case with tax, whether the costs are deductible will depend on the specific circumstances of each case.
If you have any queries then please do not hesitate to contact your usual team member.
HMRC Business Income Manual (BIM) BIM35660