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HMRC internal manual

Employment Income Manual

Other expenses: education and training: where education is part of the duties of the employment

There are cases in which the duties of the employment necessarily include external education and meet the requirements of section 336 ITEPA 2003. Typically these cases will be employments which involve research or an employee who is undertaking a training phase of their career, during which the attendance at external courses represents an intrinsic part of the duties of the employment. Typical cases are illustrated by examples EIM32545.

In the 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 under S336 ITEPA 2003 if the employee was employed on a training contract where training was an intrinsic contractual duty of the employment (see also EIM32530 and EIM32545), where any personal benefit would be incidental and not therefore give rise to a dual purpose of the expenditure, and the other conditions of S336 are met. See EIM31650.

The above case can be contrasted with the earlier case of CRC v Decadt (TCL3792) where a hospital doctor was refused relief for the expenses of travelling to and sitting professional examinations. As part of his employment, Dr Decadt was required to hold a National Training Number (NTN) and attend mandatory training courses. Dr Decadt was however not employed on a training contract. Therefore his expenses had not been necessarily incurred in the performance of his duties of employment as was required under S336.

It is important in cases where relief is sought for training costs incurred under the terms of a training contract for the employee to be able to demonstrate, by reference to the contract of employment and all other relevant documentation, that:

  • training is an intrinsic part of the contractual duties of the employment
  • all other duties are being undertaken as part of the training process - they constitute the practical aspects of the training process and are intended to complement the theoretical aspects of the training, which include the externally provided training
  • there is a mandatory requirement for the employee to undertake the external training as an intrinsic part of the duties of the employment although it should be noted that even when training is deemed to be mandatory this in itself will not be sufficient for the costs of that training to qualify for relief
  • failure to complete the training and obtain the qualification will mean that the employee will not be able to continue in employment with the employer in the role that would otherwise have been available to them after qualification

HMRC has identified a number of training courses specific to the medical profession where relief for training costs incurred will qualify for tax relief. EIM32540 provides details of medical training courses that meet the requirements set out above.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)