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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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There. I have just started work as a sole trader as a warehouse

Resolved Question:

Hi there. I have just started work as a sole trader as a warehouse and logistics contractor / consultant. However, I wish to do some training courses to formalise existing skill sets (Project Management), and gain some new skills (HGV Training) As a sole trader, I know that training expenses are not widely accepted by HMRC as allowable expenses. Given that the costs of these courses will exceed £5000 in this tax year, would I be better off incorporating as a Limited Company, paying myself minimum wage as a director, and claiming the training costs as expenses for the business? Total profit for this tax year should be around the £30,000 mark.
Thanks
Tim
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Training expenses can be treated as tax allowable provided they are incurred wholly and exclusively for the purpose of the trade carried on by an individual.

On the other hand, training costs incurred in acquiring a completely new specialisation or qualification would not be allowable.

In your example
Courses to update yourself with skills already you possess i.e. project management would be allowable
Gaining HVG skills would be acquiring a new skill and this expense would not be allowable

More information on this can be found in HMRC manaul BIM42526 here

http://www.hmrc.gov.uk/manuals/bimmanual/bim42526.htm

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Hi there,

Thanks for the information. I was unsure about the project management training costs as it is a completely new qualification to me (PRINCE2), although I have been running projects for some years.

With regards ***** ***** second part of my question, if I incorporated as a limited company, would all training expenses be allowable as company expenses, and thus reduce the amount of corporation tax?

Thanks

Tim

Expert:  taxadvisor.uk replied 2 years ago.
Tim, thank you for your reply.

There are two ways of looking at it. If you go for project management training you could argue that it is part of your CPD .. continuining professional development and therefore be treated as allowable expense. Furthermore, it is wholly and exclusively for purpose of the business.

With regards ***** ***** training be considered as allowable expense if you were trading as a LTD company the same principle applies... wholly and exclusively for the purpose of the business. I think you would struggle to convince that gaining HVG skills are wholly and exclusively for the purpose of the business.

I hope this is helpful.
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