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Had a new client ask if they can claim the following 2 items as "expenses":
1. Training - they are a yoga teacher and has attended training courses to be able to provide additional courses - can these costs be claimed as expenses.
2. Childcare costs - incurred when working?
Any advice would be appreciated.
Maria
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x
Edited at 16 May 2011 06:56 PM GMT
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Answer is
1 - Training yes provided it relates to the business you are running
2 - Childcare - no, it is not a tax deductible expense.
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Geoff said:
“
Answer is
1 - Training yes provided it relates to the business you are running
2 - Childcare - no, it is not a tax deductible expense.
”
How unfair!!
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The exact comment I had from a new client just a couple of weeks ago (which is how/why I found out the answer) who asked the same question and was given the same answer.
My reply was that those who are in employment would say that it is unfair for them to have to pay (generally) 12% employees NIC on their gross earnings when self employed only pay 9% on their net earnings.
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Geoff said:
“
The exact comment I had from a new client just a couple of weeks ago (which is how/why I found out the answer) who asked the same question and was given the same answer.
My reply was that those who are in employment would say that it is unfair for them to have to pay (generally) 12% employees NIC on their gross earnings when self employed only pay 9% on their net earnings.
”
When you put it like that, I suppose it's fair enough.
Good to know.
Thanks, Sandra
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Maria - I would give the HMRC a call and get this double checked
The question is: Is the course adding value to the business by learning a new task or is it updating skills already acquired?
for instance If P.Smith took a training course in Payroll he would be learning new skills to add to his business - non deductible
but if P.Smith attends a CPD seminar this is updating P.smith skills - tax deductible
On the facts you have written I would say that this is adding skills not updating but then I dont know the full story.
Looks like a call to HMRC would definetly be your best bet.
Kind regards
Liz
Edited at 16 May 2011 03:56 PM GMT
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I would say that the yoga training is allowable.
According to hmrc an allowable expense is;
"one which is wholly and exclusively for carrying on and earning the profits of the business."
Also I`m not sure that ringing hmrc would get you very far.
I once rang them twice about the same thing, spoke to 2 different people and got 2 different answers. When I told the second person they were telling me something different to the first person
I got the reply "well it depends on different peoples interpretations!!"
Steve
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Just found previous chat thread:
http://www.bookkeepers.org.uk/Forum/Thread.aspx?type=&cid=0&tid=81734&lp=54882&page=1&sort=
general chat room - set up costs what can you claim - 01/03/2011
it goes into detail about training courses.
also found this on lawyers website which explains why I have my doubts and explains it better than the HMRC BIM:
www.business-lawyers.org/site/library/legalnews/making_training_costs_tax_deductible.html
it's all to do with whether this is an intngible asset or not
Edited at 16 May 2011 09:12 PM GMT
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Thanks for all your help & advice.
Maria
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I'd agree with Liz
I had a similar conversation with a tax inspector about the costs of my ICB training. He said to me that if the costs where incurred to allow me to trade then they aren't allowable. However if the cost was to keep existing knowledge up to date then that is allowable.
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Hi All
The Lovely Liz D is 100% correct.
I too was shocked to discover that not all training was tax deductable however this was gone into at some length via the forum as Liz has pointed out and there is also case law that backs up HMRC's position.
Cheers
Stuart
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Phew - thanks Stuart & Tony
Got to admit I love doing self assessment tax - was maybe a happy researcher in a previous life.
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This thread has been very helpful and useful to me, but wondered if somebody could advise on my own personal situation.
In my 10/11 self assessment return, I will be including my new bookkeeping practice set up. From all of this information, I am now aware that I am unable to claim for the course fees for my membership status (ie Manual levels I-III).
Would you say that I could claim the cost of the computerised, SA and payroll elements as it could be argued that these are enhancing the service that I offer rather than allowing me to trade in the first place?
And what about the practice licence? As far as I am concerned I cannot undertake business without it, but some do - so it this enabling me to practice or enhancing my service? Can it be set off against tax? I am pretty sure that insurance can be off-set?
It is such a minefield!!
I await with great interest your opinions on this
Kind regards
Sandra
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Sandra:
http://www.bookkeepers.org.uk/Forum/Thread.aspx?type=&cid=0&tid=81734&lp=54882&page=1&sort=
general chat room - set up costs what can you claim - 01/03/2011
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Liz D said:
“Sandra:
http://www.bookkeepers.org.uk/Forum/Thread.aspx?type=&cid=0&tid=81734&lp=54882&page=1&sort=
general chat room - set up costs what can you claim - 01/03/2011
”
Nope - still no clearer!! I guess it never will be.
I am thinking that it is just going to be a "No" to all course fees and ICB exam expenses whether it could be argued as being enhancement to services or not! Wouldn't be good for the bookkeeper to be done for tax evasion would it!!
Thanks anyway!
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I'm in the same position. I obviously didn't pay for my recent exam and practising License "for fun" it was purely a business expense, and it doesn't feel very fair if I can't offset them. I'm struggling to get going with a capital of approx nil pounds.
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Sandra and Gigagirl
Have a look at the previous thread I copied earlier wherby James from the ICB clearly sets out what can and can't be claimed for.
Allowable: Practice Licence, Insurance, Advertising e.g. business cards
Disallowable: certain types of training courses if not enhancing but adding to skills set. Enhancement examples would be attending a CPD that was explaining New legislation for instance.
Please note that the ICB are not making these rules - it is the role of the HMRC to do so and all we can do is ensure we are not claiming tax allowance illegally, otherwise it's tax evasion.
Whether one classes this as unfair or not it is a discussion against taxes which has been ongoing since at least 1066 (and Im sure someone will correct me - history getting blurry).
We as bookkeepers are there to uphold the law and ensure that we and especially our clients dont fall foul of it. (hehehe sounding a bit like a sheriff now)
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Liz D said:
Disallowable: certain types of training courses if not enhancing but adding to skills set. Enhancement examples would be attending a CPD that was explaining New legislation for instance.
Please note that the ICB are not making these rules - it is the role of the HMRC to do so and all we can do is ensure we are not claiming tax allowance illegally, otherwise it's tax evasion.
Whether one classes this as unfair or not it is a discussion against taxes which has been ongoing since at least 1066 (and Im sure someone will correct me - history getting blurry).
We as bookkeepers are there to uphold the law and ensure that we and especially our clients dont fall foul of it. (hehehe sounding a bit like a sheriff now)
”
Hurrah Liz!!
The way you have phrased that bit about the Disallowable has made it crystal clear!
The link you posted to the thread wasn't overly helpful as people were putting in their twopenneth and it still left it a bit grey and murky.
I am well aware that it is the HMRC who makes the rules - that is why I am proud to call myself a bookkeeper!! Not sure I would shout out about being a tax inspector for fear of getting my ear chewed off from someone who isn't happy with the system! ;0)
By the way - it is 1086 - the year of the Doomsday Book!!
Thanks
Sandra
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sandra.douglas said:
By the way - it is 1086 - the year of the Doomsday Book!!
Thanks
Sandra
”
Thanks Sandra 
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Sorry to drag this up from the archives again, but......
Would I be able to enter my ICB membership itself as an allowable expense? I can't quite work out whether it falls in the allowable bracket or not.
Thanks
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My understanding is that you can. I hope you can, I have.
Kris
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