When claiming training expenses there are a few grey areas as to what you can and cannot claim. Unfortunately, not everything qualifies for tax relief, so this blog should help to offer some clarity.
Employer and employee expenses rules
- Employers can reimburse employees for a variety of business-related expenses.
- Unless expenses were incurred “wholly, exclusively and necessarily” in the course of your job, you and your employer will have to pay tax on the reimbursement.
- If you’ve been reimbursed for tax-deductible expenses by your employer, you can’t claim a tax refund—but you also won’t pay additional tax.
- If you haven’t been reimbursed for a tax-deductible expense by your employer, you may be eligible for tax relief from HMRC, provided you have receipts and the expense was incurred “wholly, exclusively and necessarily” in the execution of your job.
Self-Employed expenses rules
The updated guidance released as part of the Spring 2024 budget states you can claim allowable business expenses for training that helps you:
- Improve skills and knowledge you currently use for your business
- Keep up-to-date with technology used in your industry
- Develop new skills and knowledge related to changes in your industry
- Develop new skills and knowledge to support your business – this includes administrative skills
You cannot claim for training courses that help you:
- Start a new business
- Expand into new areas of business that are not directly related to what you currently do
Previously, HMRC disallowed tax relief for course fees that provided you with new knowledge, such as cosmetic dentistry as this was considered a capital expenditure, creating an enduring benefit for the dentist. Meaning, no tax relief for anything new, only for dentistry refresher CPD courses.
However, the new guidance recognises that dentists need to partake in training to provide the latest technological advancements and industry changes.
These changes will allow a tax deduction for all training costs for a dentist, provided they meet one of the following conditions.
- The training is related to dentistry.
- The training is aimed at enhancing skills or knowledge of dentistry.
- The training is intended to improve their performance as a dentist.
Please note: Generally, if the training costs are allowable, then any associated costs (e.g. travel, books, etc.) will also be allowable. If this includes overseas travel then the trip needs to be solely for business purposes only.
Example training expenses likely to be allowable
- HMRC Example – Ryan is a plumber and attends a beginners’ bookkeeping course. Although the course will not help Ryan with the skills he needs as a plumber, it will teach him how to keep accurate accounting records, which will help him run his business better. The cost of the course is likely to be an allowable expense.
HMRC wants all self-employed people to improve their bookkeeping skills. This course would be allowed for a dentist.
- HMRC Example – Tim is a potter, and he takes an e-commerce course and then a short, introductory course on website development. The courses are not directly related to pottery, but they teach skills in online selling. The costs of the course are likely to be an allowable expense.
This is the same for a dentist claiming their training costs seeking to acquire skills in website development for self-promotion to obtain online inquiries.
- HMRC Example – Aisha runs an online store selling children’s storybooks that she writes. She attends a beginners’ course on drawing illustrations. The cost of the course is likely to be an allowable expense because Aisha is using her skills to improve the children’s storybooks that she creates.
This example can be applied to a dentist who wants to attend a course on 3D printing to assist in obtaining accurate images and models of the anatomy of a patient’s teeth and jaws.
- HMRC Example – Felicity is a personal trainer. She attends a course to improve her understanding of nutrition and gains a basic qualification in nutrition. The knowledge that she gains will also help her to develop better training plans for her existing clients so the cost of the course will be an allowable expense.
We see similarities between this and dentists who want to develop an understanding of alternative holistic dentistry over traditional scientific dentistry. HMRC should allow claiming courses for any dentist wishing to develop a sense of holistic therapy, such as nutrition education, aromatherapy, homoeopathy, herbology, spiritual healing, hypnosis, and electroacupuncture.
Example training expenses likely to be disallowed
- HMRC Example – Amari is currently unemployed but wants to become a driving instructor and start his own business. He completes a course so that he can become an approved driving instructor and wants to claim the cost of the course as an expense. Disallowed: this is to start a new business that does not already exist.
No tax relief can be obtained by any self-employed dentist for their training until they have started working as a dentist. The tip is to ensure significant training costs are incurred after becoming a dentist, which can be hard in the initial training phase to becoming a dentist.
- HMRC Example – Craig is a taxi driver, but he wants to change his business and move into the painting and decorating industry. He completed a painting and decorating course at his local college and wants to claim the costs of the course. The cost of the course was not incurred for the purpose of Craig’s existing taxi-driving business and is related to the painting and decorating business he plans to set up, so it is not allowed as an expense.
As given in the example, if any dentist wants to start a new trade or profession, if they have yet to start that new business, there would be no tax relief on any training costs.
Questionable Expense Example
- HMRC Example – Simone is a freelance makeup artist and wants to move into the tattooing business and open her own tattoo studio. She undertakes several tattooing courses and wants to claim the costs as an expense. The costs of the tattooing courses were not incurred for the purpose of Simone’s existing business and are unrelated to her makeup artist business, so they are not allowed as an expense.
We would like to refer this to a hygienist who wants to become a dentist. Given the crossover, we might be tempted to argue with HMRC that a hygienist is extending their skills in dentistry. Any practising hygienist could presumably use their existing skills as a dentist and work with the same patients in the same treatment room.
Useful Resources
Change of view on training costs
Tax relief on training costs for dentists
If you have any questions relating to your training and course expenses then please get in touch and a member of our team will be happy to help.
