Are training costs tax deductible for the self-employed?

HM Revenue & Customs have recently updated and clarified their guidance on training costs paid by the self-employed (March 2024).

The general rule for whether the cost of a training course can be deducted from your self-employed profits is that it must be incurred wholly and exclusively for the purposes of the trade being carried out by the business at the time that the training is undertaken.

If you are self-employed, a training course that updates or provides expertise or knowledge in your existing business area will normally be deductible. This means that training on new skills or knowledge for you to keep up with changes in your industry, or to help you keep up with advances in technology can be allowable.

Training on subjects that are ancillary to your main trade can also be allowable too, depending on the circumstances. A tradesman who pays for a training course on bookkeeping or digital skills, which would not necessarily help them as a plumber, but will help them run their business better would likely be able to deduct the cost of those courses from his self-employed profits.

Where a training course is to give to an individual the skills to start a brand-new business, or to add a new, unrelated business area to their business, then HMRC view them as not allowable. An example quoted by HMRC is a freelance makeup artist that wants to move into the tattooing business and attends courses-these would not be deductible.

To see some examples of expenses and whether they are likely to be allowable or not please see: https://www.gov.uk/guidance/check-if-the-cost-of-training-could-be-an-allowable-business-expense

If you need more clarity, please feel free to give us a call and we can help you assess your specific situation.