What type of training course counts as an allowable expense?

As a freelancer, there’s a range of allowable expenses that you are entitled to claim for – from mortgage interest when you’re working from home to fuel when you’re travelling, office equipment and more.

Getting your expenses right and making sure you claim for all of those you are eligible for is important, as these deductions affect the amount of tax you pay.

For many self-employed freelancers, making sure you’re up to date with the latest legislation and keeping on top of your continued professional development (CPD) is essential to your career success and often costly.

Fortunately, for many training courses, you can claim allowable business expenses. These training courses must be exclusively for business purposes – courses that help you improve the skills and knowledge you use in your business, such as refresher courses.

Training courses you cannot claim expenses for

In some instances, training courses do not count as allowable expenses. This would be if you were completing training to:

• start a new business
• develop in new areas of business, including anything related to your current business.

Does training towards CPD hours count as an allowable expense?

For those self-employed professionals who are required to do a set number of CPD hours per year to maintain their professional association membership, these hours would usually count as allowable expenses.

This could include online courses, seminars or conferences that allow you to update you existing business knowledge.

Books you buy or documents you print in relation to your course also count as allowable business expenses, as can subscriptions you have for professional or business purposes.

Example of a training course that would count as an allowable expense

If you are an engineering contractor and you attended a health and safety training course in relation to some new legislation, this would be an allowable expense.

If you are an IT contractor or a freelance marketeer and you attend a course regarding updates on software or a platform you use as part of your job, this would also be an allowable expense.

Example of a training course that would not count as an allowable expense

If a Management Consultant decided to do a nutrition course, to pursue a personal interest, this would not be an allowable business expense, as the skills gained are not for the benefit of your business.

For some professionals, it is possible for part of a course to be considered allowable and part not.

To help summarise the difference between what is and is not acceptable, HMRC state in their Business Income Manual (BIM35660): “You should therefore allow proprietors a deduction for expenditure that merely updates existing expertise or knowledge but disallow any expenditure that provides new expertise or knowledge (particularly where it brings into existence a recognised qualification like a Master of Business Administration).

Travelling to and from training courses

As well as the course itself, you may also be able to claim business expenses for the travel costs of getting to the course and accommodation costs, if an overnight stay is needed.

Travel and accommodation costs may include:

• Public transport including train, bus, air and taxi fares
• Fuel
• Parking
• Hotel rooms
• Meals on overnight stay

How can I claim an expense?

As a self-employed contractor or freelancer, to claim an expense, you need to pay for the expense from your personal bank account. You then need to write a company cheque or make a bank transfer to cover the cost from your company account to your personal account.

Each time you pay for an expense, from your personal account or your business account, you need to keep a receipt for the expense for at least 6 years. This is a legal obligation and would be needed to back up your case, if ever you were subject to a HMRC investigation.

As working out business expenses can be complex, it’s always wise to discuss them with your accountant.

Access further guidance and legal resources for the self-employed

The Markel Law Hub is an online resource containing a range of documents and articles to help you manage the various laws you can encounter when running a business.

The Law Hub currently helps over 50,000 users and contains:

• 800+ legal resources including contracts, policies, forms, and letter templates from Markel’s expert solicitors
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• 460+ straight-forward guides
• 350+ links to key resources
• Up-to-date information on new legislation and case-law
• Live Chat available Monday to Friday 09:00 – 17:00
• Legal helpline

There are two ways you can access the Markel Law Hub.

1. Simply purchase a Legal Expenses Insurance policy from us with prices starting from £75.00, which we think is a small price to pay, it only takes a few minutes via our online system.
2. If you do not require Legal Expenses Insurance but feel that you would benefit from access to the Law Hub, you can purchase an annual subscription for £189.00 +VAT. Click to the Markel Law Hub here for details.

If you are interested in our Legal Expenses Insurance policy, click the green button below to get a quick online quotation or call us on 0333 321 1403.

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Sources:

https://www.gov.uk/expenses-if-youre-self-employed/training-courses

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim35660

https://www.businesswest.co.uk/blog/everything-you-need-know-about-tax-deductible-training-expenses

Related articles:

A guide to freelancer expenses

When and how to add late payment interest to your invoices

Steps freelancers can take to deal with late payments

Author Katherine Ducie, Marketing Executive