A guide to offsetting training expenses against rental income

A guide to offsetting training expenses against rental income

11:04 AM, 13th December 2010, About 11 years ago 4

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Improving knowledge and skills to make more money is one of the common traits of buy to let investors who queue up to attend seminars, courses, and conferences.

Some of these events cost thousands of pounds to attend – and investors often try to claim the cost back through their property business only to find the taxman disallows the expense.

The rules for claiming knowledge-based expenses are complicated and often even tax inspectors can’t come to an agreement about allowing an expense.

Two tax rules affect the claim:

  • If the expense gives a property business owner new skills or expertise, then the claim is disallowed as a capital cost and a rental business can only reclaim specific capital costs mainly relating to buying, selling and improving a property
  • If the expense is for training that reinforces current knowledge, then the claim is allowed

The problem is drawing the line between the two.

Let’s assume that all property investors have a basic understanding of keeping financial records, but take a tax course to help them better understand the rules for their business, then that’s OK as a business expense.

The same property investor then takes a course on lease options with a view to business expansion in to a new area, then this is not allowed as a business cost.

If a cost is not allowed, any related costs like travel and subsistence can’t be claimed either.

Avoid any course specifically for novices – including that word or similar terms suggests the person has no knowledge in the field and is looking to learn. That would come under a new skill.

A good way to work out if a claim is allowable is to put yourself in the position of an employee for any large company.

The firm will pay for training that enhances the employee’s knowledge to let them perform their job better, but won’t pay for new skills or qualifications.

Apply that rule to training costs and you won’t go far wrong – and don’t forget training costs include books, subscriptions to web sites and magazines as well as seminars and courses.



Comments

by

14:49 PM, 14th December 2010, About 11 years ago

As training to gain new knowledge is a "capital" expense, this suggests that the expense can be used to offset capital gains tax.

Is that right, and if so then how would it work?

by

14:53 PM, 14th December 2010, About 11 years ago

Hi Mike

It wasn't our intention to imply that but I will refer your question to our partner accountant just to see if there is an angle to be persued here. Personally though, I doubt there will be.

Regards

Mark Alexander

by Alex McGuinness

5:41 AM, 4th March 2020, About 2 years ago

Does this apply for self assessment because a new accountant is telling me that BTL's do not count asa business and therefore training and most subscriptions cannot be deducted.

E.g.
"The nature of property letting requires some activity to maintain the investment, but that is not enough to make it a business. For example, being a landlord normally involves:
undertaking or arranging for external and internal repairs

preparing the property between lets
advertising for tenants and arranging tenancy agreements
generally maintaining common areas in multi-occupancy properties; or
collecting rents.
In order for a property owner to be a self-employed earner, their property management activities must extend beyond those generally associated with being a landlord (which include, but are not limited to, the above)."
From HMRC Internal Manuel: https://www.gov.uk/hmr.../national-insurance-manual/nim23800

by ian paul

14:31 PM, 6th January 2021, About 10 months ago

I know this is an old article but I wanted to know if I were to do a training course, what would I be able to reclaim. I have 2 buy to let properties in my name. I have recently started a ltd company and I am in the process of purchasing a property to rent in the ltd company. as I already have knowledge of property and the course I will attend is to build on that knowledge, can this be reclaimed in full?
thanks


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