Are training costs tax deductible for the self-employed?

HMRC have recently updated and clarified their guidance on training costs paid by the self-employed.

Is there a simple way to know what CAN be deducted?

The general rule for whether the cost of a training course can be deducted from your self-employed profits is that it must be incurred ‘wholly and exclusively’ for the purposes of the trade being carried out by the business at the time that the training is undertaken.

If you’re self-employed, a training course that updates or provides expertise or knowledge in your existing business area will normally be deductible. This means that training on new skills or knowledge for you to keep up with changes in your industry, or to help you keep up with advances in technology can be allowable.

In addition, training on subjects that dovetail with your main trade can be allowable too, depending on the circumstances. For example, a hairdresser who books a training course on bookkeeping or digital skills, aiming to improve their bookkeeping or marketing would probably be able to deduct the cost of those courses from their self-employed profits.

What training costs AREN’T allowable?

Where a training course is to learn the skills to start a brand-new business, or to add a new, unrelated revenue stream to an existing business, then HMRC usually view the costs as not allowable.

For example, the same hairdresser deciding to complete a course in web design to move into that industry and away from hairdressing. 

You can see some more examples of expenses and whether they are likely to be allowable or not by following this link: https://www.gov.uk/guidance/check-if-the-cost-of-training-could-be-an-allowable-business-expense

As always though, if you’re considering some training but are unsure whether the costs would be allowable, please get in touch and we’ll be happy to help.