If you’re the owner of a small to medium-sized business (SME) currently operating as a Limited company, you can receive Corporation Tax relief against work-related training costs occurred when you and your employees attend corporate training courses.
Business Expense vs. Capital Expenditure
In a recent article on how to understand self-employed expenses we gave the example of a self-employed writer attending a training course on writing; this would be deemed to be an allowable business expense in the eyes of HMRC.
A similar example from the point of view of a Limited company could be that of a small marketing agency attending a course on social media marketing. HMRC would deem this to be work-related training, and would therefore allow you to claim Corporation Tax relief against the cost of the event.
Corporation Tax relief will only apply, however, to work-related training courses that are designed to ‘update or enhance’ you and your employees existing skills in the areas in which your company operates. If you choose to attend a training course so to learn a new skill that you’re planning to incorporate into your business at a later date, this is seen as capital expenditure.
Back to the example of the Limited company marketing agency; should they choose to attend a training course on accounting practices with the intention of offering accounting services to their clients somewhere down the line, HMRC would treat this as capital expenditure and allow them to claim Capital Allowances, rather than Corporation Tax relief.
Attending Work-Related Training Overseas
When you attend work-related training courses in the UK, any travel costs to and from the course location you and your employees incur also count towards your Corporation Tax relief, assuming you didn’t travel with greater extravagance than normal.
For this reason, it’s notoriously difficult to persuade HMRC that it’s necessary for you to attend a work-related training course overseas, regardless of how relevant it is to your line of work.
Should you have to attend such a course in a foreign land, to have any chance of persuading HMRC that doing so is an allowable business expense you’ll need to be able to clearly show them that your Limited company’s business commitments going forward couldn’t be performed without the knowledge that the training brought to you. You should also be prepared to produce the entire itinerary of your trip for HMRC to look over.
Keep in mind that the warmer the location of your training course, the longer HMRC will spend looking over your claim; they’ll approve Corporation Tax relief on a trip to Sweden sooner than they’ll approve relief on a dalliance in the Bahamas. And don’t forget that HMRC will disallow portions of your trip from potential relief should it be used for purely personal purposes.
How to Get Corporation Tax Relief on Work Training Costs
To speak with a professional to discuss the likelihood of you receiving Corporation Tax relief on an upcoming training course you’re due to attend, contact us today on 020 7129 1199 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.