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Call for Budget re-think of tax rules on training costs
by Susie Hughes at 13:40 18/03/14 (Political News)
Rules on which training costs can be deducted as a business expense are damaging the development of the UK’s skill base and should be addressed in this year’s Budget, according to contractor management service, the Professional Representation Network.
The Professional Representation Network says that current tax rules discourage self-employed contractors from investing in acquiring new skills, and risk creating skills shortages.

Under the current rules, contractors can claim training as a business expense if they are refreshing or updating their existing skills, but not if they wanted to add new skills to enable them to take on a wider range of opportunities.

For instance a software programmer who wishes to retrain for a software project management role cannot claim that training as a business expense.

Other examples of training that cannot be claimed as a business expense include:

  • An IT systems administration specialist who trains as an app developer
  • An oil rig machine worker who trains as a fire and gas safety professional
  • An IT manager who takes an MBA so that they can provide more senior level advice to IT start-ups/

As contractors typically work in fast moving sectors such as IT, mobile technology, oil and gas, engineering and financial services, the skill requirements in these sectors can change rapidly as technology evolves. It is argued that having the chance to train in areas outside their current expertise means that contractors can respond to changing business demand, and create a portfolio career: moving from contract to contract without long gaps of unemployment.

Kristian Gourlay, Director at Professional Representation Network, said: “The Government is supportive of improving the UK’s skill base and making this change to business expenses rules would help meet that objective.

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“Competition in areas such as IT, finance and oil and gas services is intense and it is fought on a global basis. We need to give both contractors and full time employees the best possible skills and allow the self-employed the tools to move from slow growth parts of their market to take advantage of growth opportunities. That is to the wider benefit of the UK economy.

“Giving more sensible tax breaks on training costs will allow all UK contractors, and the UK businesses they work for, to keep moving up the value chain and avoid being stuck with redundant skills or in shrinking market segments.

“The tax rules on training for contractors don’t reflect how contractors work or the rapidly evolving needs of the businesses that use them. It would make a lot more sense if contractors could claim for any business training as a business expense.

“The tax rules need to change so that contractors have the opportunity to develop as wide a skills base as necessary.

“If businesses can’t find the skills they need amongst UK contractors, when they need them, the reality is that they will be forced to look overseas.”

Full coverage Budget issues affecting small businesses and freelancers - and experts reactions to them - will be available in the Political News section of Shout99.

Alerts also available through our Twitter feed.

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