Training costs might be courses, seminars, webinars or even just reading. Training cost can be categorised into 2 groups:
1- Training for a new skill or specialism (often where a qualification is gained)
For example, if you were a plumber and you decide to train to become a Personal Trainer. As this is a different area & it’s not linked to your current trade, this wouldn’t be an allowable expenses & is therefore not tax deductible.
2- Updating skills or expertise (CPD)
If you did some training to update your skills in your current trade. For example, if you’re a beautician and you attend a course to learn a new makeup technique available. This would be considered tax deductible as its updating a skill used and linked to your current trade.
Here are a couple of examples of allowable training expenses:
Example 1
A wedding photographer works part time. They want to improve their photo editing skills, so they attend an online refresher course on using photo editing software.
As they are updating their existing editing skills which are related to their business, the cost of the course is likely to be an allowable expense.
Example 2
A plumber runs their own business. They sign up to a beginners’ bookkeeping course at their local college. Although the course will not help them with the skills they need as a plumber, it will teach them how to keep accurate accounting records, which will help them to run their business better.
The course will improve their record-keeping knowledge and they will learn skills which they need for the purpose of running their business. The cost of the course is likely to be an allowable expense.
And here are a couple of training expenses that wouldn’t be allowable:
Example 1
A freelance makeup artist wants to move into the tattooing business and open their own tattoo studio. They undertake several tattooing courses and want to claim the costs as an expense.
The costs of the tattooing courses were not incurred for the purpose of their existing business and are unrelated to their makeup artist business, so the costs of the course are not allowed as an expense.
Example 2
An unemployed person wants to become a driving instructor and start their own business. They complete a course so that they can become an approved driving instructor and want to claim the cost of the course as an expense.
They cannot claim the cost incurred on the course because the course provides new skills which will help them to start a new business that does not already exist.
In summary…
Therefore, as you can see from the above, it depends on the nature of the training expense in relation to your current trade. What would be an allowable expense for 1 sole trader, won’t necessarily be allowable for a different sole trader.