ATT calls for equal access to tax relief on training costs

At the Spring Statement today, the Chancellor highlighted ‘people’ as one of his three priorities, with a goal to encourage businesses to offer more high-quality employee training. The Government has concerns over whether the current tax system is doing enough to encourage businesses to invest in training because UK employers spend just half the European average on training for their employees.¹

The ATT welcomes any support for employee training – but would also like the Government to look at the position for self-employed people² as, when it comes to learning new skills, this group of people currently cannot access the same tax benefits. Where an employer pays for a work-related training course for an employee, there are no tax consequences for the employee on the benefit that they have received and their employer can receive tax relief for the costs incurred. In contrast, the self-employed are only allowed tax relief where the costs are incurred to update the individual’s existing skills. Tax relief is denied if the individual invests in training to develop new skills to use in their business.

The ATT would like to see the imbalance rectified between employees and the self-employed when it comes to developing new work-related skills.

Michael Steed, Co-chair of ATT’s Technical Steering Group, said:

“If its goal is to invest in people, the Government needs to consider not just employees but also the self-employed.

“As far as possible, employed and self-employed people should have a level-playing field for tax relief on work-related training costs. Tax relief for such training costs should be available regardless of whether the person is employed or self-employed, learning a new skill or updating an existing skill.”

Michael Steed added:

“Self-employed people are often surprised and disappointed to find that relief is not available for the costs of acquiring new skills to develop their business. Yet if the same business was incorporated and run as a limited company - making the individual an employee of their own company - provided the course was genuinely for the benefit of the business, the company could receive corporation tax relief on the costs with no tax consequences for the individual.”  

Notes for editors

1. See the Spring Statement 2022 (the ‘blue book’) paragraph 4.36 and note 12.
2. Self-employed people includes both individuals working for themselves and partners in partnerships.