Tax Relief and Sponsorship in Partnership

Many people assume that training costs automatically get tax relief

We often get asked how to set up training schemes that are also tax efficient. (We’re not accountants and we can not offer specific advice, but we can highlight some aspects of the current UK situation that might help you justify re-looking at your training programmes).

We invite you to partner with Coracle by investing in a training scheme that benefits your staff, your customers and offers tax relief at the same time.

Does training automatically get tax relief?

Assuming that the training improves skills of the employees, the answer is.... as is often the case with tax, that it may or it may not. Training is recognised and encouraged by the UK government through the use of tax relief and also through a scheme which came into force in 2010 which gives employees the right to request time off for training. As to whether the training qualifies, it depends on who pays for the training and what the training is for.

If an employee pays for their own training then there is, generally, no tax relief available. However, if that person is doing the training as an absolute need - ie, the training is ‘wholly, exclusively and necessarily incurred’, then tax relief is available.

The rule of thumb is that unless the training is necessary, the cost isn’t deductible. Another point to be careful of is that where an employee pays for their own training and then reclaims the cost through expenses, this becomes a taxable benefit in kind.

When the training is being paid for by the employer, the situation is somewhat simpler. Essentially, any training which helps employees to improve their performance in their job is allowable.

Scenario:

What happens if your organisation invests in an online training scheme for your employees and then offers the training content to customers or the supply chain, as a form of value-added service?

In this scenario, the cost of the online training scheme would be an allowable expense, whether it was for staff or customers.