Claiming training expenses through your limited company

If you work through a limited company, your company can usually pay for training relevant to your work, or that helps you do your job more effectively, without creating a taxable benefit for you personally.

The position becomes less straightforward if the training has little to do with the company’s business, or you’re really doing it for personal reasons, as Kerry Newman, Head of SG Accounting, explains in this guide.

Training your company can pay for

Most typical work-related training shouldn’t cause a problem when it comes to reclaiming expenses. This includes courses which update your existing skills, help you keep up with changes in your profession or make you better at running the business.

For example:

• A software developer taking a course on a new programming framework.
• An accountant attending a course on changes to tax legislation.
• A director taking management or leadership training.
• A business owner improving sales or marketing skills used in the business.

HMRC’s definition of work-related training is quite broad. It includes training intended to improve or reinforce knowledge, skills, or personal qualities likely to be useful when carrying out your employment duties.

Can you train in something completely new?

Yes, potentially. A course doesn’t become a problem simply because you’re learning a new skill rather than brushing up on something you already know.

For employment tax purposes, work-related training can include new skills if they’re relevant to your duties or likely to be useful in carrying them out. So, for example, a technical director learning a new programming language isn’t restricted to claiming for technologies they already know.

Corporation Tax relief is a separate question. The company must still be able to show that the cost was incurred for the purposes of its business.

This is where some confusion arises with the rules for sole traders. HMRC has separate guidance in BIM35660 on training costs incurred by self-employed people. Those rules shouldn’t simply be transplanted to a company providing work-related training to one of its directors or employees.

For a company director, the useful questions are therefore fairly practical: does the training relate to your duties, and is the company paying for it for a genuine business reason?

Travel and accommodation costs

If you need to travel to attend qualifying training, the company may also be able to pay associated travel and accommodation costs, where they qualify as part of the work-related training or under the normal business travel rules.

This might include train fares, flights and hotel costs where an overnight stay is necessary.

Read our guide to the 24-month travel expenses rule for more on business travel and temporary workplaces.

What if the training is mainly personal?

This is where you need to be more careful.

Take an IT consultant whose company pays for a course to qualify as a personal trainer. If the new qualification has nothing to do with the company’s activities or the director’s duties, it’s difficult to argue that the company is paying for genuine work-related training.

The company may not be entitled to Corporation Tax relief and, if the work-related training exemption doesn’t apply, paying the cost for the director or employee can also create a taxable benefit.

Simply paying for a course from the company bank account doesn’t make it a tax-deductible business expense.

Keep evidence of the training

Keep the invoice or receipt for any training your company pays for, together with details of the course.

For anything unusual or expensive, it’s also sensible to keep a short note explaining how the training relates to your duties and the company’s business. That gives your accountant something concrete to work with if the tax treatment isn’t obvious.

Useful HMRC guidance

• HMRC EIM01210 – Work-related training
• HMRC EIM01220 – Meaning of work-related training
• HMRC BIM35660 – Training courses for the self-employed

Read our complete guide to limited company expenses.