HMRC proposes overhaul of work-related training

If there is one idea that everyone across the political spectrum agrees upon, it is that having a more skilled workforce is a good thing. However, at present our tax system is very inconsistent in incentivising work-related training.

The existing rules

Consider these three scenarios:

1) The good employer

Gemma works at a reputable accountancy firm, who value their employees and wish to train them up for the benefit of both the employees and the firm. Gemma wishes to move into a specialist area and therefore wants to study for a new qualification. Her employer is happy to pay her course fees and reimburse her travel costs. They receive tax relief on these expenses, and Gemma is not taxed on the cost.

2) The bad employer

Daniel works for a miserly accountancy firm. Like Gemma, he wishes to gain a new qualification but he must pay for it out of his own pocket. However, as he is not on a training contract he cannot claim tax relief for his costs.

3) The self-employed

Jordan is a self-employed accountant, and so pays for all his own training. He can get tax relief for his costs of continuous professional development. However, if he wants to join Gemma and Daniel in studying for a new qualification then tax relief for these costs is denied.

A new approach

As part of the Government’s 2018 Spring Statement, they have released a consultation on how to redress this imbalance. They are considering harmonising the tax treatment of work-related training, so that in all the above scenarios tax relief would be available. Although as a firm we of course fall into the first scenario, we would welcome this change as being both fair and good for the UK economy.