August 24th, 2018

Training costs tax relief in a Limited Company

   

 

It is so often the case when you start up a Limited Company that you may not have all the necessary skills to run a company therefore many directors seek to obtain training in order to enhance their skills and hopefully succeed in running a successful company.

We will often get asked “Will I get tax relief on training  costs for my new company?”

The answer is …..

Where a limited company provides training to officers and/or employee Corporation Tax Relief is generally available as long as the expenditure meets the basic requirement of being wholly and exclusively for the purpose of the trade.  In most cases, the company will be providing training so employees can better perform their duties in the trade or to advance the companies trade and a deduction will be available.

HMRC consider trade purpose and the revenue nature of training expenditure in the Business Income Manual BIM47080.

What if the training is not work related?

Employees (including officers) are subject to income tax on the benefit received under ITEPA 2003.

Exemptions for income tax and national insurance are available for ‘work-related’ training. The term is self-explanatory, but the strict definition of work-related is provided in the Employment Income Manual EIM01220.

Where the training is not work-related, for example, a company manufacturing widgets sending its Finance Director on a candle making course, it is not work related and is therefore  a taxable benefit in kind for the director. The benefit is reportable on the director’s p11d.

The cost of the candle making course is, however, a deductible expense for corporation tax purposes, as it is part of the Finance Director’s remuneration package, and their employment is wholly and exclusively for the purpose of the company trade.

This guidance does not apply to sole traders or partnership businesses.

If you are starting up a limited company and need help with your company accounts and finances then get in touch.  Our team of expert accountants  are here to help

Share this post

Filed under

Business advice Limited Companies

by
Director

Alison obtained a First class degree in Accountancy and Management at UCLAN University. She then went on to qualify as a certified accountant in 2006 and became a founder member in 2011.

Alison trained at a practice in Liverpool and, within her 10 years there, she developed as an accounts manager and obtained a varied portfolio of clients which has provided her with a range of experience in accounts, audit, VAT and taxation.
Alison specialises in giving sound jargon-free advice to a range of small and medium sized businesses.

Give a Goat

Give us a referral and we will donate a goat to a family in Africa

Find out more

Our Newsletter

Enter your email address to subscribe to our mailing list.
  • This field is for validation purposes and should be left unchanged.