If you work via a limited company, the tax treatment of training costs can sometimes appear unclear, with lots of ‘grey areas’ to navigate.
Some training costs are fully deductible against your company’s profits, while others, particularly those that expand into new business areas, are not.
Getting the tax treatment wrong in your accounts could result in an unexpected tax bill or unwelcome scrutiny from HMRC.
This article explains which training costs you can claim, which are disallowed, and what HMRC’s official guidance (BIM35660) says about it – all in plain English.
Training costs you can claim as a business expense
1. Courses that update or enhance existing skills
If a training course is directly related to your current business activity and helps improve or maintain skills, HMRC considers this an allowable revenue expense. According to HMRC BIM35660:
Where a self-employed trader attends a training course designed to update or maintain existing professional skills, the cost is allowable.
Examples:
- A graphic designer learning new Adobe Illustrator techniques
- A software developer taking a course on new JavaScript frameworks
- An accountant refreshing knowledge on the latest tax legislation
2. Ancillary business skills (non-core but relevant)
You can also claim for training that helps you run the business more effectively, even if it’s not directly part of your core trade.
Examples:
- A self-employed photographer taking a social media marketing course
- A builder attending a bookkeeping workshop
- A copywriter doing a time management seminar
3. Training for directors on soft or leadership skills
Director training in communication, leadership, or project management is allowable, provided it’s tied to improving the company’s management.
Examples:
- A director attending a leadership workshop to manage a team
- A business owner joins a sales psychology course to improve client interaction
4. Travel, accommodation, and subsistence costs
If your training qualifies as a business expense, associated travel, accommodation, and meals (if overnight) are also deductible.
Examples:
- Train or flight to attend the course
- Hotel stay if the course is not commutable
- Meals during an overnight stay
Training costs you cannot claim
1. Courses that lead to a new trade or business
If training equips you with a skill outside the scope of your current business, the cost is considered a capital expenditure and is not tax-deductible.
Examples:
- A web designer retraining to become a surveyor
- An IT consultant taking a personal trainer course
2. Training that results in a new qualification
Training that provides a new qualification unrelated to your current trade is not deductible.
Examples:
- An events planner doing an MBA
- A videographer studying for a law degree
3. Hobby or personal-interest courses
Even if loosely business-related, courses taken for personal development or enjoyment are disallowed.
Examples:
- A business coach taking a yoga instructor course
- A marketer enrolling in a cooking class
Revenue vs capital expenditure – why it matters
One of the core distinctions in HMRC’s guidance is between revenue and capital expenditure.
Revenue Expenditure
- Day-to-day running costs of the business
- Deductible from profits for Corporation Tax purposes
- Examples: skills updates, rent, subscriptions, and admin software
Capital Expenditure
- Costs that create a lasting benefit or lead to a new trade
- Not deductible against trading profits
- Examples: property, equipment, training for new qualifications
As per BIM35660, training that helps grow your existing business is revenue in nature, while training to start a new activity is capital and not deductible.
Can I still pay for a disallowed training expense via my company?
Yes, your company can pay for non-deductible training. But:
- You won’t get Corporation Tax relief on the cost.
- If it mainly benefits you personally, it may be treated as a benefit in kind.
Example
Your company pays for you to take an MBA unrelated to your current role. The company can pay for it, but:
- The cost cannot be deducted from profits.
- You may face extra tax and NIC, as it could be a benefit in kind.
Quick Summary Table
| Type of Expense | Tax Deductible? | Can Be Paid by Company? | Risk of Benefit in Kind? |
|---|---|---|---|
| Skills update (same trade) | Yes | Yes | Low |
| Soft skills for business benefit | Yes | Yes | Low |
| Training for new trade | No | Yes | Possible |
| Hobby or personal interest | No | Yes | Likely |
Tips to stay on the right side of HMRC
- Keep a record of your reasoning: Explain how training links to your current trade.
- Keep receipts and course outlines: Upload to your accountancy software platform for safekeeping.
- Be cautious with qualifications: Especially those which lead to new professions.
- Check with your accountant: Always the wise choice if you have any questions.
Useful HMRC references
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