Are training courses tax deductible if you're self-employed?
Continual learning and development are essential features of self-employment. The prospect of new challenges every day is a big driver for many people to start working for themselves. But are training courses tax deductible if you’re self-employed?
More structured guidance or qualifications can be a big help in increasing client rates, scaling up your business, or safeguarding your future. If you’re contracting, consulting, or freelancing, the main concerns about any course or qualification will be the cost, time commitment, and potential benefit to your career. But in many cases, you’ll be able to claim allowable business expenses to offset investing in your skills and knowledge.
Before you rush to sign up for new training, not every course will be automatically deductible. So, it’s important to understand what is eligible for tax relief, before you commit to potentially expensive education.
Which courses and training are allowed as tax deductions?
There are no restrictions on who provides any training, or how you access it. There’s no difference between any online course or in-person education when it comes to allowable business expenses. Or whether it’s offered by another freelancer, a professional industry organisation, or an educational institution. This could include the webinars and training offered by IPSE events, for example.
HMRC regulations on allowable expenses focus on the subject of any training. To be able to claim, it needs to improve the skills and knowledge you use in your current business, and has to be closely related.
You can’t claim for anything completely unrelated to your occupation, or to prepare to start a new business. And training courses that help you expand into new areas are also ineligible, even if it’s related to your current business.
As an example, if you currently work as a freelance web designer, a refresher course to update your Photoshop skills would be allowed, as it’s software you use every day. But you couldn’t claim for a course on cyber security or IT networking, even if they may come in useful setting up your home office, or as new services to offer clients.
This does mean there are some potential grey areas, including where only part of a course would be considered acceptable.
As a business owner, you’re typically able to claim for anything relating to the management of your company, such as project management, health and safety, or leadership skills.
Can you claim other training-related expenses?
If the course qualifies for a tax deduction, then you’re also able to claim other relevant training-related expenses, including travel and subsistence. Some of the things that are potentially deductible include:
- Mileage allowance
- Bus, train, or plane tickets
- Parking, tolls, or congestion charges
- Hotel costs if you need to stay overnight
- Necessary food and non-alcoholic drinks
- Learning material, such as books required for the course
- Business costs while you’re away, such as telephone calls.
Obviously, you’re not able to claim travel and subsistence costs if the course is being held at your normal place of work. And it’s likely to raise questions if you’re flying to the south of France in Summer for training which you could have found supplied within 10 miles of your office.
It’s a good idea to keep records and receipts for all training, and to check with a qualified accountant or tax professional if you’re unsure about whether you can claim or not.
What counts as work-related training?
Business expenses are allowed if you’re improving existing skills and knowledge which is used for your business. This also applies if the training is for maintaining membership or certification by a professional industry body.
If you need to do a set number of continual professional development (CPD) hours to maintain your professional association membership these hours would usually count as an allowable expense, and can include seminars and conferences along with online courses.
For example, if you’re an electrician and attend a course on ensuring your work meets the latest regulations, or a beauty therapist taking online training on the newest techniques for manicures, these would be suitable expenses. But if you decided to learn plumbing or how to become a tattoo artist, these would represent new skills and revenue streams, and wouldn’t be applicable for tax relief.
The same rules apply to any employees of your company. A training course which isn’t business related would be treated as a ‘benefit in kind’ which may incur tax and NI payments by both the company and employee. You should also be careful if you’re offering training to a family member who is also an employee, ensuring that it benefits the company and existing work-related skills and tasks.
For example, if you offer to pay for a family employee to pursue a degree or MBA qualification, it’s likely to be seen as offering new skills and knowledge, except in very specific cases.
How to claim for training courses if you’re self-employed?
If you’re operating as a new sole trader, any training costs will likely be classed as capital expenditure, but for the more experienced, it will fall under revenue expenses, which can be declared as part of your Self Assessment tax return.
Limited company directors can claim the cost of allowed training against Corporation Tax each year, on the relevant CT600 tax return form.
If you do decide to fund a course for an employee that isn’t an allowed expense as a benefit in kind, they will need to be reported on a P11D form, along with paying tax and National Insurance.
More help and support for self-employed taxes
You can find more help and guidance in our Advice section covering self-employed tax guidance, along with tips on improving your financial wellbeing, and growing your self-employed business.
Looking for more advice? We can help.
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