BIM42526 - Specific deductions: administration: own training courses

To be an allowable deduction, expenditure incurred by the owner of a business on training courses must be incurred wholly and exclusively for the purposes of the trade carried on by them at the time the training is undertaken.

Expenditure on training is normally revenue expenditure if it updates or provides expertise or knowledge in the individual’s existing business area. Costs incurred on training to acquire new skills or knowledge to keep pace with advancements in technology and changes in industry practices, related to the owner’s existing business area, will usually be allowable. Expenditure on training courses which are ancillary to the main trade, such as introductory bookkeeping or digital skills course may also be revenue expenditure depending on the specific circumstances of each case.

See BIM35660 for guidance on the deductibility of expenditure on training courses, and for examples that illustrate when training costs are likely to be allowable and when they are likely to be disallowed.

Business purpose test

In considering the question of purpose, you should not take an overly narrow view of whether the content of any particular course only up-dates existing skills of the individual. However, if it is clear that, for example, a completely new specialisation or qualification unrelated to the individual’s existing area of business or the running of their business will be acquired as a result of the expenditure, it is unlikely that the expenditure will be wholly and exclusively for the purposes of the existing trade.

For general discussion of business purpose see BIM37050 onwards.

Capital test

Expenditure on skills or expertise will be of a revenue nature if the training relates to the individual's existing business area. See Dass v Special Commissioner and others [2006] EWHC2491 (Ch), and BIM35660.

This includes costs incurred on training that relates to an individual’s business area and is undertaken to acquire new skills or knowledge to keep pace with advancements in technology and changes in industry practices.

See BIM35660 for specific examples of when training costs are likely to be allowable as well as not allowable.