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Training courses as pre-trading expenses?

Hi

I have a friend who works as a peer support worker for a drug & alcohol rehab organisation.  He is undertaking courses to improve his skills, paid for by himself.  This is mainly in order to be able to become self employed in 2 years' time, but it also helps him improve his performance in his current role.  So far he has spent approx £3,000 over the past 12 months or so.

Am I correct in thinking that these costs are not tax deductible?  Or can they be offset against his first SA tax return as pre-trading expenses?  Or, since they improve his work now, is there a way that they can be offset against his salary now?

I'm thinking that they can't be, but just wanted to check if there's a loophole that I'm unaware of!!

Thanks

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12th Aug 2017 13:22

Not allowable on the facts given.

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12th Aug 2017 14:19

Generally considered extremely iffy to claim this stuff.

The time span - you tell us he's not starting self employment now but in maybe two years time puts it completely off the iffiometer scale.

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to lionofludesch
12th Aug 2017 15:18

What would be your advice if he were starting self-employment in 2 months time?

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to andy.partridge
12th Aug 2017 15:22

Still high on the iffiometer scale.

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to lionofludesch
12th Aug 2017 15:39

2 days? I think you probably know where this is going but it might help clarify things for the OP

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to andy.partridge
12th Aug 2017 15:42

OK - well, I didn't want to dash his hopes but if he could get the time lapse down to a couple of seconds, he may be at least on the iffiometer scale.

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By mrme89
12th Aug 2017 21:23

A course in order to set up sole trader business is usually a capital cost and not allowable against trading profits.

It's highly unlikely that the cost can be relieved against their employment income - I wouldn't expect a condition of their employment To complete courses that will enable them to go into self employment - if it were, it still would be difficult to pass the test for an allowable employment expense.

Your friend could set up a limited company. They could probably pay for the courses through the company and they 'may' pass as work related training - the company would obtain a corporation tax deduction, and there would be no BIK. However, given the timescale you mention, this is probably a no-go.

I don't work in tax, however and others may have a different view.

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14th Aug 2017 21:14

OK if they are capital the CA's would have the same effect?

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to carnmores
15th Aug 2017 11:47

Quote:

OK if they are capital the CA's would have the same effect?

No.

Just because an expense is classified as capital in nature, does not mean it automatically qualifies for CAs. CAs are actually only available on specific types of capital expenditure, which does not include the cost of training courses.

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to stepurhan
15th Aug 2017 12:56

Hi S, Thanks that's exactly what i wanted clarified

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14th Aug 2017 21:51

Thanks all for your help. It does seem odd that it could be allowable for a limited company but not a sole trader - but that's the fun of tax law!

I'm guessing that even if he did set up a ltd co, he still wouldn't be able to back-claim for the expenses so far? And the costs of accounts & CT prep etc would probably outweigh any benefit anyway.

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to sunbeam42
15th Aug 2017 12:38

Quote:

Thanks all for your help. It does seem odd that it could be allowable for a limited company but not a sole trader - but that's the fun of tax law!


It's for the same reason a limited company can pay its sole owner/director a salary. The company is a legally separate entity, which can pay for training for its staff.
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