Are Training Costs an Allowable Limited Company Expense

In a Nutshell

Specific HMRC guidelines apply

In a Sentence

Yes and no! Whether or not training costs count as a business expense is dependent on what you are learning.

The HMRC rules surrounding training as a business expense can be complicated and do depend on certain specified caveats. This expert Guide will help you navigate your way through the rules relating to training costs.

It Depends

Probably not the answer you wanted to hear! The criteria surrounding training expenses is dependent on what sort of training you want to do, your employment status and the size of your limited company.

HMRC classify training in two separate categories. There is training that updates your existing skills set and training that gives you a brand new skill.

Updating Your Existing Knowledge

Personal development and professional training that you undertake to update your existing skills set is allowable as a valid limited company business expense. This comes under continuous improvement & on-going professional development.

If you are an IT contractor it could mean upgrading your knowledge on, say, scripting or programming to the latest international standards. If you are a health worker it may mean taking your annual refresher course and learning the latest, say, heart diagnostic understandings.

Training For a New Discipline

This is a big no-no. Your limited company cannot pay for you to learn a completely new set of skills, as a legitimate business expense. HMRC are very clear that this is not allowable and you will have to pay this for yourself.

HMRC's logic behind this ruling is as follows: "Tax law will treat such expenditure as capital (and so not allowable), for example on the grounds that in tax terms it gives rise to an 'enduring asset or advantage of a capital nature".

If you are in any doubt, why not put your specific training cost question to one of our Ask an Expert panel members?