I recently provided tax and accounts training to trainee Tour Guides. Every year I get asked if the costs of training are allowable for tax purposes.
Consider the example of one of my clients that is a sole trader plumber. He would like to attend a refresher course to reinforce his plumbing skills. He is also thinking about attending a course to train as an electrician so that he may expand his trade. Are the costs of these courses allowable for tax purposes?
For training costs to be allowable, they must be incurred wholly and exclusively for the purposes of the trade. The course undertaken to refresh the client’s skills in plumbing would be allowable as it is updating his skills for the trade that he is currently undertaking. This cost would then be deducted from the profits of the business.
The training costs for the electrician course however would not be allowable. The benefits obtained from this course give my client a new skill and as such a new specialisation within his trade. It is therefore not incurred wholly and exclusively for the purposes of the trade.
In the case of the tour guides, if they are currently trading as tour guides, the costs would be in furtherance of the trade and therefore allowable.
If however the trainees were retraining with a view to trading at tour guides in the future, the costs would be considered a new skill and therefore not allowable for tax purposes.
