Electrical installation training costs offset on freelance event business

[numberwrong]

Hi guys,

Tax and expenses question (UK):

I am a freelance lighting tech/designer. In 2020 I started a 2 year electrical installation course at college (currently in my 2nd year now) with mind to shift from production/event work to electrical installation and AV installation work (for better working hours).

Can the cost of this training be offset on tax with my current sole trader event business?

I do not intend on completely stopping all event work, and I haven't as yet started doing any electrical/AV/install work.
I suppose if and when I start doing any significant installation work I would set up another company/business to run along side my event work.

Having said this, the qualifications I will get from the course (Level 2, Level 3, BS7671 etc) are not completely irreverent to the events industry. I also may have some work lined up in the Film/TV industry where proper electrical quals could arguably be deemed important.

Any thoughts on this? TIA

[sandall]

If you are a sole trader (SA200 tax return) AFAIK you can do whatever paid work you like as long as it is loosely covered by how you describe your business on your tax return. Training (if relevant to your work) would seem to be a legitimate business expense.

[kerry davies]

As long as the training is somehow related to your current business, which this evidently is, the costs are normally tax deductible.

The word "normally" is in there as the standard HMRC get-out clause, they never ever say something definitely is or is not, so claim it. 

[Stuart91]

I'm not an accountant but it looks like a legitimate expense to me. Your business is allowed to evolve and transition, and this training is a valid part of that process. 

Also, HMRC are chronically understaffed at the moment, I would imagine the chances of them picking a fight over this kind of thing are quite low. 

 

[Junior8]

Always go the manual with questions like this - the tax manual is online. The test here (see https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim35660) seems to be whether the training is to update existing skills relevant to the business as it exists at  the moment which are deductible and training in completely new skills which usually are not at least as far as being set against profits is concerned, which I assume is what you are asking. Kerry is right in pointing out the standard HMRC disclaimer but it is also worth remembering that at bottom all the rules are designed, and case law reinforces this,  to ensure as far as possible that an allowable business expense does not put the sole trader in a more favourable position than an individual personal taxpayer. It seems to me, speaking as a completely unqualified person,  that given the info in your OP that your situation is not clear cut and could fall into that most hazardous of areas - the grey one. Personally I would take qualified advice but only if the cost was worth the trouble in tax saved. 

Edited January 12, 2022 by Junior8
gramer

[sandall]

Useful clarification by J8, but this is much less clear-cut, so I suspect that if queried (most unlikely even in "normal" times) a reasonable case could be made that gaining an electrical qualification is relevant to event work.

[Junior8]

Agreed. But you never know. 

[kerry davies]

Nothing can be certain Roger but the courses he seems to be taking are no more than those which he already needs, according to the book, when working on power in event production. He isn't expanding into a new area but qualifying himself to plug in lights to temporary power supplies according to IET standards. If he was claiming for car mechanic training they might, but only might, query it and his response would be; "generators, boyo."

They really aren't bothered about we small fry. The only time in 20 years I had a query was when they lost my SA and tried to charge me £100 for late submission. One email later they sent me £100 for their error. 

[Junior8]

Quite right Kerry - but as you know I have this penchant for looking at the detail and they did ask. The sole trader in not usually looked at too closely as the tax recovered would never merit the time expended.

Of the five or so contacts who have had tax inspections there is one  I would mention as a warning to others. It concerns a chap who thinks he was 'shopped' by a retailer after using a company credit card for what were clearly not business linked purchases (they found that was fine but a lot of travel disallowed by the way). 

[sandall]

The only time I've had a dispute about SA (back in the days when tax inspectors were real people with names & offices) they offered me a £500 loss for past years, which I happily accepted.