Cost of Training, - tax deductable?

[Ger59]

I was interested to see in a previous post that training is an allowable self-employed expense. I took up a training position in September 2006, paying £10,000 for the one year course, as well as a further £750 for tools/exams. After the course, I became self-employed in my new field of expertise and now find myself puzzling over the question of whether the money paid out in 2006/07 can be counted against profits for 2007/08. Basically, how far back can allowable expenses be claimed prior to starting trading?

[JS123]

I've not checked back to find the previous post so am just commenting based on what you say now.

You need to differentiate training which gives you a completely new skill and training which just keeps you up to date in your existing area - what accountants and lawyers would term CPD or CPE - or maybe enables you to comply with legal regulations such as first aid in health and safety etc.

New skills - and I think this is what you have acquired given the timing and amounts involved - would fail to be allowed as a deduction against profits because they are considered "capital" not "revenue". In acquiring the skill, you have acquired an intangible asset of lasting benefit.

Just as a general point, pre trading expenditure is any expenditure which would be allowable if you were trading, and is allowed as an expense on the first day of trade.

But as I say, I think the training is out.

[taxattack]

I would agree that the training described cannot be claimed as a sole trader expense. However, there is a possibility that if you become an employee of a company which requires that skill, then reimbursement of the training cost to the employee may be made without deduction of income tax. The relevant case is Silva v Charnock.

chris @ taxattack.co.uk

[Ger59]

The previous post was June 9th 2008, and yes, the training was for a completely new skill.
Hmm...thanks for the swift replies, though slightly disappointing obviously! However, from what you say at the end (JS123), concerning pre-trading expenditure, I take it that the £600+ worth of (small) tools, purchased on the first day of the course, would be allowable as an expense on the first day of trading?
With regards becoming an employee (Taxattack); although I'm currently self-employed, if I decide to seek employment with a company and they require the qualififications I've acquired to take me on, then the training expenses may come into play? If so, back to an original point, how long before that option lapses?

[JS123]

Have a look here & next page:

http://www.hmrc.gov.uk/manuals/bimmanual/BIM46351.htm

If the individual tools cost very small amounts you can write them off.

But if they are only 1 or 2 things totalling £600 you need to claim capital allowances. These rules are different.