The question of whether or not education, exam fees and other training costs are tax deductible is a complex one and an area that HMRC reviews regularly.
HMRC guidance is very clear and conclusive – the costs of travel to courses, course fees and other associated costs are generally tax deductible if attendance at the event is an intrinsic part of the employment and one of the duties of employment
‘A trainee doctor employed as a registrar on a training contract is required, as a stated contractual duty of the employment, to attend various external training courses. As part of the duties of the employment there is a mandatory requirement to maintain a national training number by attending a series of training courses and events. Failure to complete the course and obtain the qualification will mean that [they] cannot proceed to the next stage of [their] chosen profession.
Attendance at the training events is an intrinsic part of the employment and one of the duties of the employment. The costs of travel to the events, course fees and other associated costs met by the employee are deductible.’
Training that is not an allowable deduction
HMRC guidance set out in EIM61018 is more restrictive in that expenses incurred by doctors in relation to training activities and CPE (continuing professional education) are not an allowable deduction because the training activities are not undertaken in the performance of the duties of clinical work. This is the case even when the training activities are compulsory.
The guidance at EIM32535 summarises what the doctor must demonstrate by reference to the contract of employment and other relevant documentation in order for a claim to be accepted:
- 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 and 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.
In the case of Revenue & Customs Commissioners v Dr Piu Banerjee (2010), 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 contact where training was an intrinsic contractual duty of the employment and where any personal benefit (unlike most CPE courses), would be incidental and would not give rise to a dual purpose of the expenditure.
Relief has been denied in the following tax cases:
- Parikh v Sleeman (63TC75) – a hospital doctor was refused relief for the expenses of attending training courses during periods of study leave
- Snowdon v Charnock (SpC282) – a specialist registrar was refused relief for the expenses of undergoing mandatory personal psychotherapy
- Consultant psychiatrist v CIR (SpC557) – an NHS consultant was refused relief for the expenses of CPE necessary to maintain their professional qualification
- Decadt v CRC (TL3792) – a specialist registrar was refused relief for the expenses of taking professional examinations, even though it was a condition of their employment to do so.
HMRC draws a distinction between preparation for performing the duties of the employment, which may include attending educational courses and actually performing those duties when considering expense claims. Expenses of preparation are not generally deductible.
The expense must be incurred in performance of the duties of the employment. It is not enough for the expense to be relevant or incurred in connection with the duties of the job. Nor is it enough if the expense merely puts the employee in a position to start work or keeps the employee qualified to do the work.
HMRC will not automatically allow a tax deduction for exam and other educational and training costs paid personally by a doctor. Whether the expenses are allowed will depend upon your specific circumstances.