Hi folks its me again with my same beautician questions! I have a client who is a beauty therapist - i believe trained at college to do all things - make up, nails etc now she is completing further training to be able to advertise more services - my questions are
1) if the training is for something completely new i.e. she only does nails and is now training in spray tan is this an allowable expense as it will be used to enhance/progress her business?
2) if the training is for a new method of something she is already trained in i.e. a nail course that allows her to do fancier (!) nails than she does already is this a business expense?
she is training wholly for business use but when it comes to training im still a bit unsure!
Not like you are going to do those type of courses for your own personal enjoyment. They are clearly to enhance the business services she wants to offer.
Sorry but I disagree, unless she is an employee of a limited company.
The only training costs a self-employed person can claim are costs to keep an existing qualification, not ones which are done solely to gain a new skill or qualification to enhance the business services she wants to offer!
A beauty therapist adding new additional "complementary2 skills was the original question. Peasie you are correct I did say "employee of a limited company".
BIM35660
"There is some uncertainty whether the cost of proprietors of a business attending a training course, directly related to the business activity, is deductible in arriving at the profits chargeable to tax under Schedule D Cases I or II.
Where attendance at a course is intended to give business proprietors new expertise, knowledge or skills, which they lack, it brings into existence an intangible asset that is of enduring benefit to the business. We take the view that the expenditure is therefore of a capital nature, and deduction is prohibited by ICTA88/S74 (f).
On the other hand, where attendance is merely to update expertise etc. which proprietors already possess, the expenditure is normally regarded as revenue expenditure and will be deductible if it satisfies the wholly and exclusively for the purposes of the trade test in ICTA88/S74 (a) - see BIM42105.
You should therefore allow proprietors a deduction for expenditure that merely updates existing expertise or knowledge but disallow any expenditure that provides new expertise or knowledge (particularly where it brings into existence a recognised qualification like an Master of Business Administration)."
Intangible assets are balance sheet assets and therefore cannot be claimed as a trading expenses for tax purposes - or capital allowances claimed (which I have seen some people do in the past).
-- Edited by YLB-HO on Monday 4th of February 2013 08:18:14 PM
Page 82 clearly states the only training that cannot be claimed is for a) personal gain (i.e. hobbies, example being a cupcake baking class when you're a beautician!) b) reward a la benefit in kind (an example probably would be similar to previous as it would be difficult to justify a nail art course for a beautician as being a 'reward') c) inducement (i.e. anything else you can't really justify as work related).
I agree there are some differing rules for expenses between employers and employees in some cases, but no difference in this case between ltd cos and sole traders.
And if you're VAT registered you should be able to claim it back.
taking this outside of the immediate context 480 relates to employee's (including directors) rather than the self employed
I too disagree with Frauke (slightly rather than totally) on different reasoning in that I don't feel that a limited company would be allowed to expense training either as, although the director is an employee they also have control over the company so retraining into something else would not be an allowable expense whereas for other employees of the same limited company it may be if such is a requirement of their employment.
Imagine a business is an IT consultancy and they decide that they want to retrain to be bookkeepers. As bookkeeping has no relevance on the existing business then training costs would not be an allowable expense of the business.
Where retraining is allowable is where existing skills are enhanced and/or the training is a necessary part of the role such as CPD for an accountant.
For the self employed rather than referring to 480 refer to BIM47080 (see here : http://www.hmrc.gov.uk/manuals/bimmanual/bim47080.htm)
For the case in question here the question really is whether the additional service is part of the existing business so if the business is put across as a beauty therapist (or whatever the proper title is) then nails, tan, hair, makeup etc. would all be part of the business but if the business is a nail salon then a tanning course would be something completely separate.
Hope that makes sense,
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks, that's useful, I shall steal that link for my own reference. I can certainly see your logic regarding the limited company/director retraining comment as it makes perfect sense.
I am now questioning my own claims as technically I am a management accountant, so more suited to KPIs and MI, but I also do book keeping and other accountancy based tasks.
I have a long permanent role 'history' in finance projects, so was hoping to squeeze in the costs of Prince2 course as an expense...and maybe in the future some technical tax training (to offer a fully rounded service).
