Claiming course fees back

[Akhter]

Is it true that course fees can be claimed back from revenue?
Was thinking that things are quiet so might be a good time to complete a course if fees can be claimed back.

Akhter

[Oli]

Grumps is your man for this one, i was under the impression that initial training is not claimable, but further training for specialist work may be. Although that was just what sprang to mind so is far from gospel.

[grumpygrouter]

Course fees........There has been conflicting advice written about this previously. I will try to find out a difinative answer. bear with me.

[cornish_crofter]

When I did my 16th edition I was told by HMRC that I could claim back training that was specific to my self employment. I took that to mean that anything that directly furthered my ability to earn money in terms of increased skills was a yes, but personal development was a different issue.

Hence 16th Ed yes, but courses in assertiveness, no.

At 6ft 4in I don't need too many assertiveness courses

[Akhter]

Thanks for input folks.
Must get back into looking at the courses again if I can get something back.

[whitebeam]

Allways claimed any courses I've done relating to my work

[Derry]

I'm with oli, i dont thing start up course fee's can be claimed unless you are unemployed to begin with..
not sure with courses after that but whitebeam seems to have done it so obviously you can!

[TheWrightTiler]

i rang hmrc and quite simply the answer is no, you cannot claim course fees for something that will increase your knowledge or give you new skills, even if unemployed as usually the jobcentre will fund if you qualify for it

you can however claim for refresher training, as long as not learning new skills

eg

forklift driver has to resit test every 3 years then its claimable for the retest but not the actual course

eg

doing the nett 4 day course is not claimable, doing the one day nat stone course is not claimable as even though you can tile you are LEARNING how to lay nat stone tiles

IN A NUTSHELL PEEPS

IF YOU ARE UPSKILLING OR LEARNING FROM SCRATCH DONT CLAIM

IF YOU ARE REFRESHING YOUR TRAINING THEN CLAIM AS LONG AS NOT LEARNING ANYTHING NEW

andy

[grumpygrouter]

i rang hmrc and quite simply the answer is no, you cannot claim course fees for something that will increase your knowledge or give you new skills, even if unemployed as usually the jobcentre will fund if you qualify for it

you can however claim for refresher training, as long as not learning new skills

eg

forklift driver has to resit test every 3 years then its claimable for the retest but not the actual course

eg

doing the nett 4 day course is not claimable, doing the one day nat stone course is not claimable as even though you can tile you are LEARNING how to lay nat stone tiles

IN A NUTSHELL PEEPS

IF YOU ARE UPSKILLING OR LEARNING FROM SCRATCH DONT CLAIM

IF YOU ARE REFRESHING YOUR TRAINING THEN CLAIM AS LONG AS NOT LEARNING ANYTHING NEW

andy

I have heard this before Andy and as yet I have found no documentary evidence to back it up. I am currently on a mission to find such documentation instead of just somebody on the phone saying so.

There is a part of the Taxation Act 2005 that states -
74 Retraining courses

(1) In calculating the profits of a trade, a deduction is allowed for retraining course expenses if—
(a) the person carrying on the trade (“the employer”) incurs the expenses,
(b) they are incurred in relation to a person (“the employee”) who holds or has held an office or employment under the employer for the purposes of the trade, and
(c) the relevant conditions are met.
(2) In this section—

• “retraining course expenses” means expenses incurred in the payment or reimbursement of retraining course expenses within the meaning given by section 311(2) of ITEPA 2003, and
• “the relevant conditions” means—
  (a)
  the conditions in subsections (3) and (4) of section 311 of ITEPA 2003 (employment income exemptions: retraining courses), and
  
  (b)
  in the case of travel expenses, the conditions in subsection (5) of that section.

However, this is directed at employers that re-train people that are made redundant etc.

There is this paragraph however -

Pre-trading expenses

57 Pre-trading expenses

(1) This section applies if a person incurs expenses for the purposes of a trade before (but not more than 7 years before) the date on which the person starts to carry on the trade (“the start date”).
(2) If, in calculating the profits of the trade—
(a) no deduction would otherwise be allowed for the expenses, but
(b) a deduction would be allowed for them if they were incurred on the start date,
the expenses are treated as if they were incurred on the start date (and therefore a deduction is allowed for them).


And finally, the Wholly and Exclusively business rule. Basically this means you can only claim a deduction against tax for expenses incurred Wholly and Exclusively for business use -



Wholly and exclusively and losses rules

34 Expenses not wholly and exclusively for trade and unconnected losses

(1) In calculating the profits of a trade, no deduction is allowed for—
(a) expenses not incurred wholly and exclusively for the purposes of the trade, or
(b) losses not connected with or arising out of the trade.
(2) If an expense is incurred for more than one purpose, this section does not prohibit a deduction for any identifiable part or identifiable proportion of the expense which is incurred wholly and exclusively for the purposes of the trade.


As far as I am concerned, training courses that give you the ability to carry out a trading business which allows you to pay tax in to the British treasury is entirely business related and should be deductable, even if you have doen your course first as it is a "start up" cost.


Now i have to emphisise that this is only my opinion and is my interprtation of the regulations as I have found and read them. Going back to my original point, as yet I have seen nothing in writing to say these course costs can not be reclaimed.

Just as a thought, the IR definition of disallowable expense includes things like capital purchases, ie vans machinery etc. These items have to go to the balance sheet and depreciated. Depreciation is not an allowable business expense and is therefore added back to increase profit. You can however, claim Capital Allowances on your tax return to offset the cost of this equipment over a number of accounting periods. It is possible, that training courses, PRIOR to starting in business could be classified as Capital Expenditure and tax deductions claimed through this legislation.

[TheWrightTiler]

this was from the tax specialist advisors in dundee hmrc russell mate

heres the number 08453021484

andy

[grumpygrouter]

Just found this document ->

Decision Makers Guide - DMG35103

Non-allowable business expenses: Expenses excluded by regulations


The regs specifically say that some expenses are not to be allowed in the calculation of normal weekly earnings. These are
1) capital expenditure
2) repayments of capital on loans taken out for business purposes
3) depreciation of capital assets
4) sums used, or intended to be used, in setting up or expanding a business
5) losses incurred before the beginning of the assessment period
6) expenses incurred in providing business entertainment.


Number 4 could possibly be the basis for which HMRC are saying training course costs are disallowed. If this was the case, I would be inclined to put it in as a capital cost and claim capital allowances against it.

[grumpygrouter]

this was from the tax specialist advisors in dundee hmrc russell mate

heres the number 08453021484

andy

Yes, Andy I have spoken to people before about similar things, unfortunately they always fail to tell you the part of the regs their decision is based on. Unless they put it in writing, there is no reason to assume they are right. In fact, they are quite often wrong which is why there are so many cases that need guidance from the courts.

[TheWrightTiler]

bim42526

Specific deductions: administration: own training courses

[grumpygrouter]

BIM42526 - Specific deductions: administration: own training courses

Provided it is incurred wholly and exclusively for the purposes of the trade carried on by the individual at the time the training is undertaken, expenditure on training courses attended by the proprietor of a business (either as a sole trader, or in partnership with others) with the purpose of up-dating their skills and professional expertise is normally revenue expenditure, which is deductible from profits of the business.

The text of an article on this subject published in TB1G in November 1991 is reproduced at BIM35660.
Business purpose test

In considering the question of purpose, you should not take an unduly narrow view of whether the content of any particular course only up-dates existing skills of the individual. But if it is clear that, for example, a completely new specialisation or qualification will be acquired as a result of the expenditure, it is unlikely that the expenditure will be wholly and exclusively for the purposes of the existing trade. For general discussion of business purpose see BIM37050 onwards.
Capital test

Expenditure on new skills etc may also be capital if what is acquired can be viewed as an identifiable asset of sufficient substance and endurance. For more on the circumstances in which expenditure on intangible assets may be capital see BIM35500 onwards.

This is the critical part of this document. For people that have not started in business the training fee is something that looks like it would be capital expenditure.

In reality, if a person considering re training to be a tile notifies IR that they have started trading BEFORE they sign up for the course, all these "can I claim back" questions become straight forward - YES YOU CAN.

[TheWrightTiler]

BIM42526 - Specific deductions: administration: own training courses

Provided it is incurred wholly and exclusively for the purposes of the trade carried on by the individual at the time the training is undertaken, expenditure on training courses attended by the proprietor of a business (either as a sole trader, or in partnership with others) with the purpose of up-dating their skills and professional expertise is normally revenue expenditure, which is deductible from profits of the business.

The text of an article on this subject published in TB1G in November 1991 is reproduced at BIM35660.
Business purpose test

In considering the question of purpose, you should not take an unduly narrow view of whether the content of any particular course only up-dates existing skills of the individual. But if it is clear that, for example, a completely new specialisation or qualification will be acquired as a result of the expenditure, it is unlikely that the expenditure will be wholly and exclusively for the purposes of the existing trade. For general discussion of business purpose see BIM37050 onwards.
Capital test

Expenditure on new skills etc may also be capital if what is acquired can be viewed as an identifiable asset of sufficient substance and endurance. For more on the circumstances in which expenditure on intangible assets may be capital see BIM35500 onwards.

This is the critical part of this document. For people that have not started in business the training fee is something that looks like it would be capital expenditure.

In reality, if a person considering re training to be a tile notifies IR that they have started trading BEFORE they sign up for the course, all these "can I claim back" questions become straight forward - YES YOU CAN.

missed a bit russell mate you need to click the link for the remainder of the text


here it is below


Tax Bulletin article


The treatment of expenditure incurred by the proprietor of a business on training courses for themselves was described in TB1G published in November 1991, which read as follows:

“There is some uncertainty whether the cost of proprietors of a business attending a training course, directly related to the business activity, is deductible in arriving at the profits chargeable to tax under Schedule D Cases I or II.

Where attendance at a course is intended to give business proprietors new expertise, knowledge or skills, which they lack, it brings into existence an intangible asset that is of enduring benefit to the business. We take the view that the expenditure is therefore of a capital nature, and deduction is prohibited by ICTA88/S74 (f).

On the other hand, where attendance is merely to update expertise etc. which proprietors already possess, the expenditure is normally regarded as revenue expenditure and will be deductible if it satisfies the ’wholly and exclusively for the purposes of the trade' test in ICTA88/S74 (a)” - see BIM42105.

You should therefore allow proprietors a deduction for expenditure that merely updates existing expertise or knowledge but disallow any expenditure that provides new expertise or knowledge (particularly where it brings into existence a recognised qualification like an Master of Business Administration).

[grumpygrouter]

That brings me back to my original thought that this can be classed as capital expenditure and therefore offset against tax by way of the Capital Allowances regime.

[TheWrightTiler]

double checked with taxman, if learning new skill either to start a business or upgrade it then it cannot be claimed, however, if already have the skill then it is a refresher then it can be claimed

if no skill beforehand then cant claim

Where attendance at a course is intended to give business proprietors new expertise, knowledge or skills, which they lack, it brings into existence an intangible asset that is of enduring benefit to the business. We take the view that the expenditure is therefore of a capital nature, and deduction is prohibited by ICTA88/S74 (f).


if have skill then refresh then you can,

On the other hand, where attendance is merely to update expertise etc. which proprietors already possess, the expenditure is normally regarded as revenue expenditure and will be deductible if it satisfies the ’wholly and exclusively for the purposes of the trade' test in ICTA88/S74 (a)” - see BIM42105.

the bloke did say that it is very confusing and without an actual case to review he could not comment but all tax inspectors operate on the above code, but that all new training for self employment cannot be claimed,m red bit, and refresher training blue bit can

andy

[grumpygrouter]

Thanks for that Andy, just to clarify what you said, the inital training costs can be reclaimed but not by way of tax deduction through the Profit and Loss account. It would need to be reclaimed through the capital allowances regime, over a number of years.

It isn't "lost" entirely.

[alib103]

This is starting to to get way too complicated! I have just left it up to my wife who is a qualified accountant and she has claimed the tax back on my training courses. No problems so far, fingers crossed, touch wood etc etc!