Can I claim training expenses from my Limited Company?

With many people furloughed, COVID-19’s lockdown has had many revaluating their professional skills and whether there’s more they can do to enhance their skill set. Contractors will want to be an attractive candidate for clients once things return to normal, and may therefore be considering updating their skills. But before you take on a new training course, who will foot the bill?

In this blog we explore what you’re able to claim for when it comes to training expenses.

 

What are you able to claim for?

The training must be relevant to your profession and therefore be demonstrable to generate income for your company. The training must enhance or reinforce your current knowledge, help you to do a more proficient job, complete the work faster, and overall enable you to perform your work better. Basically any training undertaken must be at the benefit of your company.

If you’re able to demonstrate that you’ve met most if not all of the above prerequisites, then HMRC states you’re able to claim tax relief against the cost of the training. You’re also able to claim for associated costs, such as accommodation and travel expenses.

For more information take a look at HMRC’s official guide on claiming for training expenses.

 

If the training is for you

If you are the director of your own Limited Company there’s a little more leeway as to the types of training you’re able to claim for. Courses which are aimed at improving your ‘soft-skills’ such as management skills, dealing with stress, leadership and time management are all allowable.

These types of training can add value to your company, as they’ll make you a more effective and efficient manager, and in turn make the company more productive.

 

If the training is for an employee

Generally speaking, if the training is wholly for the benefit of the company then it’s an allowable tax-deductible expense. To be on the safe side always ask yourself if it would benefit the company, and if in doubt double check with your accountant.

 

What about a training course overseas?

Whilst during lockdown this may not be of interest, if it’s something you’re planning when travel restrictions are loosened then read on. For tax purposes you’ll need to prove to HMRC that the trip was solely for the training, and not for personal reasons.

You’ll need to keep a record of your itinerary, training location and times you were there. You’ll also need to prove that the training was necessary for you to gain new skills which will ultimately benefit the company.

 

What aren’t you allowed to claim for?

A university degree or residential course whereby you learn a new skill which cannot be transferable to the services your company provides. You may be able to pay for the degree through your company and claim it as a capital expense, but you won’t receive tax relief. Again, if you’re unsure speak to your accountant.

 

What if a client wants to pay for your training?

A client may decide that they’d like you to undertake further training, but at a cost to them. In this instance it’s advised to decline their offer, as if you were to accept it could alter your IR35 status.
Whilst employees would expect their employers to pay for any training, a truly self-employed person would pay for their own.

 

If in doubt, double check

Before undertaking any new training or activity which you think you may be able to claim through your company, it’s always advisable to double check with your accountant. You don’t want to be out of pocket!