Save Tax and Update Your Skills Tip

HMRC updated its Business Income Manual guidance on 13 March 2024.

HMRC’s revised guidance reaffirms that expenditure on training is normally revenue expenditure and therefore tax deductible if it updates or provides expertise or knowledge in your existing business area.

It also states that costs incurred on training to acquire new skills or knowledge to keep pace with advancements in technology and changes in industry practices, which are related to the your existing business area, will usually be allowable  Training courses which are ancillary to the main trade, such as introductory bookkeeping or digital skills courses may also be accepted as constituting revenue expenditure, depending on the specific circumstances of each case.

On the other hand, the guidance  states that expenditure incurred on training that is unrelated to your existing business area, such as expenditure that allows you to start a new business or expand into a new, unrelated area of business, is unlikely to be an allowable deduction.

Conclusion

HMRC’s guidance seemingly attempts to draw a line between on the one hand, between, on the one hand, updating current skills or providing new skills or knowledge in for your existing trade or the costs of keeping up with technical changes and training ancillary to your trade and, on the other hand, the costs of training that would allow you to begin a separate business in a new and unrelated area. The latter would, in HMRC’s view, seemingly be capital expenditure and therefore not allowable for tax.

So, if you want to reduce your tax liability, you can improve your own skills at the same time by doing some training, even if it is just on bookkeeping.

CHAT TO US ABOUT

TAXES & ACCOUNTANCY

Striving to deliver exceptional financial services >>>

Scroll to Top