Question:

I run a small web development business through a limited company. I am the only employee of the business but I do work with a few other developers who I subcontract work out to. I am considering taking a part time MBA course that will further develop my technical and business skills and am wondering if this can be paid for by my company as a staff training expense?

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Answer:

First of all let’s take a step back from the MBA specifically and consider what staff training expenses can be put through as a business expense in a limited company.

Training costs can be provided to an employee or director of a limited company and will be an allowable expense for corporation tax purposes, with no benefit in kind impact on the employee provided that the training concerned is a course or other activity designed to impart, instil, improve or reinforce any knowledge, skills or personal qualities which:

  • are likely to prove useful to the employee when performing the duties of the employment; or
  • will better qualify the employee to perform those duties.

This guidance is only for limited companies – those operating as self-employed (sole traders and partnerships) have different and more stringent criteria for training expenses.

As to whether an MBA specifically is an allowable expense for a limited company is a bit of a grey area. If you have a strong argument that the MBA is in line with your businesses activities and it would mean that after you had it your company would be able to command a higher fee and thus improve the companies profitability then there is a decent argument that it is an allowable expense for the company with no benefit in kind issue on you personally. It is not risk-free from a HMRC challenge though.

We would advise that you document a detailed business case that outlines why it is a worthwhile investment for the company, so you can refer to this document should you ever need to demonstrate to HMRC why it was claimed as a business expense.

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