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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Other expenses: education and training: education costs: case law

The leading case is Blackwell v Mills (26TC468). Mr Mills was a student laboratory assistant who was required to attend classes as a condition of his employment. He was refused a deduction for the cost of travelling to classes and for the purchase of textbooks. The expenses were not incurred in performing the duties of his employment.

In the High Court, Macnaghten J commented:

“it seems to me impossible to say that, when he was listening to the lecturer at the Chelsea Polytechnic, he was performing the duties of a student assistant at the laboratories of the company.”

That decision was followed in Humbles v Brooks (40TC500), which concerned a school headmaster who attended weekend lectures as a pupil at an adult education college. He attended the course to improve his background knowledge of a subject he was required to teach. The course kept him up to date and provided him with material that he reproduced in lessons. In the High Court, Ungoed-Thomas J drew a distinction between:

“qualifying to teach and getting background material - and even getting information and material which he reproduced in his own lecture - on the one hand, and preparing his own lecture for delivery on the other hand.”

The dividing line drawn by the Courts is between preparation for performing the duties of the employment, which may include attending educational courses, and actually performing those duties. Expenses of preparation are not deductible under Section 336 ITEPA 2003.

Similarly, no deduction is due for the costs of continuing professional education (CPE). That is so even if participation in such activities is compulsory, and failure to do so may lead to the employee losing his or her professional qualifications, and/or their job. CPE is not a duty of the employment for the purpose of Section 336. The Special Commissioners confirmed this point in Consultant Psychiatrist v CIR (SpC557), which was about CPE expenses incurred by a consultant employed by a NHS Trust. Note that Special Commissioners’ decisions do not set a binding precedent, but they do indicate the approach that a tribunal properly directed in the relevant law is likely to take to the point at issue. Another case in the same line is Parikh v Sleeman (63TC75), which concerned a doctor who attended seminars. Once again, a deduction was refused.

In the recent case of Revenue & Customs Commissioners v Dr Piu Banerjee ([2010] EWCA Civ. 843), the Court of Appeal accepted that a deduction for training costs incurred by an employee should be allowed if the employee was employed on a training contract where training was an intrinsic contractual duty of the employment (see also EIM32535 & EIM32546) and where any personal benefit, unlike most CPE courses, would be incidental and not therefore give rise to a dual purpose of the expenditure.