Tax relief on training costs explained

Is tax relief available for training costs when setting up a new trade in a limited company?




We have been asked this question a number of times recently.

Corporation Tax Relief is generally available for officer and employee training costs. Income Tax Relief and National Insurance Relief is also available to officers and employees who receive work-related training.

Where a limited company provides training to officers and/or employees a corporation tax deduction is 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.

Employees (including officers) are subject to income tax on any benefit received, however exemptions for income tax and national insurance are available for ‘work-related’ training.

Where a company provides training costs to any officer or employee which is not work-related, for example, a company manufacturing widgets sending its Finance Director on a candle making course, the costs of the training is not work-related and is therefore taxable as a 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 anyone has any questions regarding training costs please do get in touch.

Paying Personal Self Assessment Tax

The easiest way to pay your tax bill is by faster payment transfer using your online banking service.

If you have had a bill from HMRC this will tell you which bank account to use when making payment. If you are not sure which account to use then go with HMRC Cumbernauld.

Account details to use are:

Sort code: 08 32 10
Account number: 12001039
Account name: HMRC Cumbernauld

or;

Sort code: 08 32 10
Account number: 12001020
Account name: HMRC Shipley

You’ll need to use your 11-character payment reference when you pay. This is made up of your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’. You can find this on your Electronic Self Assessment Tax Return (middle of page 1).

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