For a sole trader, training is deductible if it relates to the business you already run, whether it updates existing skills or teaches new ones that keep pace with your industry. Training that equips you to start a new business or move into an unrelated field is not. A company can normally deduct the cost of training its staff, and the employee is not taxed on genuine work related training.

What test applies to a sole trader’s own training?

Two rules apply. The cost must be incurred wholly and exclusively for the purposes of the trade (section 34 ITTOIA 2005), and it must not be capital (section 33). HMRC’s Business Income Manual at BIM42526 adds a timing point: the trade in question is the one carried on at the time the training is undertaken. A course aimed at a business you hope to run in future fails because it is not for the purposes of the trade you have now.

GOV.UK summarises the position for sole traders and partners. You can claim 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, and develop new skills and knowledge to support your business, including administrative skills. You cannot claim training that helps you start a new business or expand into new areas of business that are not directly related to your industry.

Where is the line between updating skills and acquiring new ones?

The old shorthand was that updating existing skills is allowable and acquiring new ones is not. HMRC’s current guidance is more generous than that. BIM35660 says a proprietor’s training is revenue expenditure if it either updates existing expertise or knowledge, or provides new expertise or knowledge, in the individual’s existing business area. Training to keep pace with advances in technology and changes in industry practice will usually be allowable, and courses ancillary to the main trade, such as introductory bookkeeping or digital skills, may also be revenue depending on the facts.

BIM42526 tells HMRC officers not to take an overly narrow view of whether a course only updates existing skills. The warning sign is a completely new specialisation or qualification unrelated to the existing business area or to the running of the business.

So the real dividing line is not old skills against new skills, but whether the learning belongs to the business you already have.

What examples does HMRC give?

BIM35660 sets out eleven examples. They are the clearest guide to how HMRC applies the test.

Likely to be allowable Likely to be disallowed
A part time wedding photographer takes an online refresher course in photo editing software. An unemployed person trains as an approved driving instructor to start a new business.
A plumber takes a beginners’ bookkeeping course to keep better records. A sportswear shop owner enrols on a sports science degree out of interest.
A potter who sells at a market stall takes courses in online selling and website development. A freelance makeup artist takes tattooing courses to open a tattoo studio.
A website designer learns to use artificial intelligence tools in the sites she builds. A taxi driver takes a painting and decorating course to change business.
A gas boiler fitter trains to install heat pumps.
A personal trainer gains a basic nutrition qualification her clients expect.
An author of children’s books learns to draw her own illustrations.

The pattern is consistent. New skills are fine where they serve the existing customers and products, or help run the business. Courses that lead out of the current trade into a different one are not.

Why can a new qualification be capital?

The main case is Dass v Special Commissioner and others [2006] EWHC 2491 (Ch), discussed at BIM35660. Mr Dass traded as an English tutor and as an adviser on appeals to tribunals. He took a law diploma course and claimed the exam resit fees. The Special Commissioner found that the course was one to equip him with a new qualification that would let him move into new areas of practice, and that the fees were capital. Lightman J upheld that decision in the High Court, saying the line may often be difficult to draw but the Commissioner’s conclusion was clearly correct.

The reasoning is that a qualification opening a new field gives an enduring advantage, much like acquiring a new asset. That is why the capital rule, not just the purpose rule, can block the cost. For the general capital test, see capital or revenue expenditure.

Can I claim a course I take before I start trading?

HMRC’s own example says no where the course is what enables you to start a business that does not yet exist: the would be driving instructor cannot claim. That is consistent with BIM42526, which tests purpose against the trade carried on when the training is done. Other costs incurred before trading starts are covered in pre trading expenses.

What about conferences and courses abroad?

The purpose test is applied strictly. BIM42525 says overseas conferences and study tours are allowable only when wholly and exclusively for the trade. A recreational element, often evident when a spouse or close relative comes along, can mean the whole cost is disallowed, following Bowden v Russell and Russell (1965) 42 TC 301. HMRC officers are told to inspect the itinerary, comparing time in conference with time spent on other things. Travel to a course is otherwise governed by the normal rules in travel expenses for the self employed.

How does this work for a limited company?

A company paying for training for its staff is in a stronger position than a sole trader paying for their own. BIM47080 reproduces Tax Bulletin 27 (February 1997), which says disallowing an employer’s spending on staff training and development will be extremely unusual, even where the training is not directly related to the employee’s current job, such as preparation for promotion. HMRC finds it difficult to imagine staff training being capital, and does not treat the cost of training staff to use new capital equipment as capital.

The exception is where the person trained has a significant proprietary stake in the business, or is a relative of someone who does. BIM47080 suggests asking whether the company would have paid for the same training for an unconnected employee doing the same job. Funding a director shareholder’s unrelated degree is likely to fail the business purpose test.

For the employee, section 250 ITEPA 2003 removes any income tax charge on the provision, payment or reimbursement of work related training, together with incidental costs, exam costs and the cost of obtaining the resulting qualification. Section 251 defines work related training as training designed to give knowledge, skills or personal qualities likely to be useful in the employee’s duties or that qualify them better for the employment (EIM01220). Under section 253, spending that is really a reward, recreation or an inducement is excluded (EIM01250). Training outside these rules can be a taxable benefit; see benefits in kind and form P11D.

Employees who pay for their own courses are rarely able to claim. EIM32525 says no deduction should normally be given under section 336 ITEPA 2003 for external education, even where it is closely relevant to the job, unless the education is an integral part of the duties.

Separately, section 74 ITTOIA 2005 allows an employer to deduct retraining course expenses for current or former employees where the conditions in section 311 ITEPA 2003 are met, and BIM47080 notes the corresponding corporation tax provision.

How does the same course work out under each structure?

Illustration only. A self employed electrician and a one person electrical company each pay £1,500 for an electric vehicle charger installation course. For the sole trader, the course adds a new skill in his existing business area to keep pace with technology, so on HMRC’s guidance it is likely to be allowable. For the company, the cost of training its employee director is likely to be allowable, and section 250 should prevent a benefit charge because the training is useful in his duties. If either instead paid for a course in commercial pilot training, both would struggle: the sole trader because it relates to a different trade, and the company because a private purpose for the director shareholder is likely.

What mistakes come up most often?

  • Assuming any new skill is disallowed, when HMRC accepts new skills in the existing business area.
  • Claiming a course for a business that has not yet started.
  • Claiming a degree or professional qualification that leads into a different field.
  • Adding holiday days or family members to an overseas conference.
  • Having a company pay for a director shareholder’s personal interest course and treating it as staff training.

Training sits alongside the other costs listed in allowable business expenses.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.