Tax on training Costs to businesses can vary a great deal. It can depend on whether the costs are being incurred personally by the employer or the employee and whether you are trading as a sole trader or a company.
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Training paid by the Employer
You can get tax relief on training which enables the employees to do better at their jobs. The employees are not taxed on the value of their training, as long as it relates to their work. This will even include general training, which might not always have an immediate impact on their work.
Training paid for by the Employee
Tax relief will not usually be given to the employee if they pay for the training themselves, even if it is to help them improve their jobs.
If the training is ‘wholly, exclusively and necessary incurred’ tax relief will be given. For example, if the training was carried out as part of their job not just to prepare them to do the job.
It is possible for the employee to be reimbursed by the employer for the cost. However, this will be counted as a ‘benefit in kind’ which will then be taxable.
If you are Self Employed
The tax situation is again different for self-employed workers. The training costs are currently classified as either a capital expense or a revenue expense. A revenue expense relates to the individual topping up their already existing skills. This is tax deductible from your income.
A capital expense relates to when the individual is training in learning new skills, outside of their current occupation. This is not tax deductible from your income.
I hope you found this useful. If you would like to know more, please get in touch.