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HMRC internal manual

Business Income Manual

Retraining expenses

S74-S75 Income Tax (Trading and Other Income) Act 2005, S74-S75 Corporation Tax Act 2009

A statutory deduction is available for retraining course expenses incurred by a trader in relation to a person who holds or has held an office or employment under the employer for the purposes of the trade, if the conditions for exemption from the charge to Income Tax on employment income are met, see EIM05005.

There is a condition in relation to the type of course provided, see S311 (3) ITEPA 2003, and employment conditions, see S311 (4) ITEPA 2003, which must both be met for the exemption to apply. A deduction may be given for retraining costs incurred before the employment conditions are met on the assumption that they will be fully met. If the employment conditions are not subsequently met and a deduction would not otherwise be allowed, see BIM47080, an assessment can be made on the employer by the end of the sixth tax year after the employment condition was breached, to recover any further tax due as a result of failing to meet this condition.

Retraining course expenses are expenses incurred:

  • in the payment or reimbursement of retraining course expenses as defined by S311 (2) ITEPA 2003
  • Includes travel expenses incurred in connection with the training course, if the condition in S311 (5) ITEPA 2003 is met.