Training Costs

[captainham]

That doesn't sound right? You can't just take money out of your company and claim it as a non tax deductible expense and not pay tax on it personally, can you?

That's not what I'm saying. You have two options in this example:

1. Let's say you draw out £42k from your business via salary/divis. Out of this money, you can pay for the training, personally, then you have whatever is left.

2. Your company can pay for the training in addition to you still drawing out £42k salary/divis. In this case, if the course is not allowable, then the cost of the course needs to be added back into your profit when calculating your CT liabilities. You still have £42k of personal money to do with as you please.
So with an allowable course of say £1000, this whole amount reduces your taxable turnover when calculating CT.
With a non-allowable course of £1000, you need to add this back into your turnover when calculating CT.

I've probably used wrong terms such as 'add back into turnover', but hopefully the point is clear..?


Same situation with things like PCG membership...your Ltd can pay this, but it is not tax-deductible...


Edit: I doubt this covers ALL training. For example an IT contractor may be able to pay for an IT course that is not within your current area of expertise but this is not tax-deductible (seek advice from your accountant though as this can be open to interpretation), but I doubt an IT contractor's Ltd could pay for an MBA (and if HMRC ever investigated, perhaps they might treat this as a directors loan or similar and hit you for charges accordingly).

[Jessica@WhiteFieldTax]

I am struggling with the narrow interpretation of this. I have no desire to do a bookkeeping course, but why is this not allowable. It is related to my employment by my Ltd. My employment is not my contract with the end client, as evidenced by the fact that I receive a salary when on the bench. I must be missing something, but what is it?

If you are doing it so you can better keep your companies books, fine.

If you are doing it so you can start a new business line, not fine.

Daft really. A far sighted govt would may any training with an accredited provider deductible, to skill up the country.

[JamJarST]

That's not what I'm saying. You have two options in this example:

1. Let's say you draw out £42k from your business via salary/divis. Out of this money, you can pay for the training, personally, then you have whatever is left.

2. Your company can pay for the training in addition to you still drawing out £42k salary/divis. In this case, if the course is not allowable, then the cost of the course needs to be added back into your profit when calculating your CT liabilities. You still have £42k of personal money to do with as you please.
So with an allowable course of say £1000, this whole amount reduces your taxable turnover when calculating CT.
With a non-allowable course of £1000, you need to add this back into your turnover when calculating CT.

I've probably used wrong terms such as 'add back into turnover', but hopefully the point is clear..?


Same situation with things like PCG membership...your Ltd can pay this, but it is not tax-deductible...


Edit: I doubt this covers ALL training. For example an IT contractor may be able to pay for an IT course that is not within your current area of expertise but this is not tax-deductible (seek advice from your accountant though as this can be open to interpretation), but I doubt an IT contractor's Ltd could pay for an MBA (and if HMRC ever investigated, perhaps they might treat this as a directors loan or similar and hit you for charges accordingly).

Thanks for clearing that up, I misread it and thought you meant pay for it personally and then claim back the money form your ltd. I sort of see what you're saying now, I just wonder if HMRC could argue there was a BIC for this?

[captainham]

This is where you need to seek advice from your accountant, as you may or may not be allowed to put it through your Ltd even if not tax-deductible.

Look at the 'Investment in your mind' paragraph in the link I gave on the first page:

Training expenses - what contractors can claim

[The Spartan]

How about Certifications for your profession how are they viewed?

[mossy]

I'm interested in this thread as I'm considering doing a PRINCE2 course (I'm a PM) funded by my Ltd co. Like TOGAF this is merely a structured framework but provides an accreditation that can provide future work.

If agents are searching for key terms like TOGAF or PRINCE2, irrespective of whether the end client actually uses these methodologies, then it could be argued that they will provide future employment opportunities.

[captainham]

How about Certifications for you profession how are they viewed?

We are firmly into "check with your accountant" territory here, or at least I should say you don't want someone like me advising you

[malvolio]

I'm interested in this thread as I'm considering doing a PRINCE2 course (I'm a PM) funded by my Ltd co. Like TOGAF this is merely a structured framework but provides an accreditation that can provide future work.

If agents are searching for key terms like TOGAF or PRINCE2, irrespective of whether the end client actually uses these methodologies, then it could be argued that they will provide future employment opportunities.

If you get paid as a PM, I can't any earthly reason why Prince2 wouldn't be an allowable expense, since it is directly related to your fee-earning work*.




*OK, Prince2 isn't, in the real world, but you know what I mean...

[Wanderer]

We are firmly into "check with your accountant" territory here

The trouble is that our accountants will give their own opinion, people here are looking for a broader discussion of other people's opinions (maybe even yours!) of what's acceptable.

[speling bee]

If you get paid as a PM, I can't any earthly reason why Prince2 wouldn't be an allowable expense, since it is directly related to your fee-earning work*.




*OK, Prince2 isn't, in the real world, but you know what I mean...

Yes, I put my PRINCE2 through the company.