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Training costs

Not sure if they're allowable

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Hi all

I have a new LTD co client, 2 Directors and shareholders, none of whom take a salary.  The business offers martial art classes to the general public and the business is only breaking even. The directors, who are also the instructors spent a lot of additional money on training costs for themselves this year. 

I have 3 questions:

1. What are the rules regarding training costs being tax deductible?

2. Since they're not actual employees, do these rules still apply? 

3. Is there a BIK element?

In my opinion they should operate as a CIC rather than an LTD but they have expressed the fact that if the company were to make money they would like to withdraw the profits ad dividends, though agree that potential for significant profits are minimal based on current number of classes.

Each director has their own full time job on which they make their living.

Thanks for your help.

 

Replies (7)

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By Tim Vane
14th Jun 2016 12:06

What is the nature of the training? Is it necessary?

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By BMary83
14th Jun 2016 12:45

I will confirm with them the exact nature of the costs but I know they were payments to a combat association, more than the usual memberships and CPD.

I don't believe they were necessary in order to keep offering the classes they do at present so, however I know that they are now offering more advanced lessons, I will find out if this was a requirement or just a "nice to have".

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By seawych
14th Jun 2016 20:29

Allowable against what?

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By BMary83
15th Jun 2016 14:05

Can I claim them as a deduction against CT profits or should they be added back?

Or if they are not deemed to be a cost incurred for the purposes of the trade are they then a BIK?

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By seawych
15th Jun 2016 21:46

It appears that the expenditure was incurred by the directors for personal training. If the company didn't pay it can't deduct it from it's profits.

As for the directors themselves, I doubt that it's allowable but they've got no income to set it against anyway.

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By BMary83
15th Jun 2016 22:27

No the company did incur the expenditure, to put the directors through training and instructor courses. Should have worded that better.

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By Cheshire
19th Jun 2016 10:23

CPD for martial arts instructors???!!!

would suggest it's not allowable, unless you have found out more about the specific courses to enlighten us

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