Only the costs of training undertaken to maintain existing knowledge and skills are deductible from profits. The Supreme Court confirmed this in a judgement of 23 December 2016.
Distinction
For the purposes of deducting education costs from income, a distinction is made between the following types of costs:
- with a view to acquiring new knowledge and skills;
- to keep existing knowledge and skills up to date.
Training costs
Study costs incurred in connection with acquiring new knowledge and skills are tax-deductible in the form of personal allowance. This usually involves a course of study or training for a future career or to improve one’s position. The conditions that must be met to qualify for this deduction can be found in our article Training expenses are tax-deductible.
Training expenses are deductible from income. It does not matter whether this relates to business profits, income from other activities or wages from employment.
The tax deduction for training expenses is under political scrutiny. This tax relief has already been significantly curtailed in recent years. However, attempts to abolish the tax relief on education expenses as part of the 2017 tax plans have been rebuffed. See our article Monument and education deductions not abolished after all.
Tuition fees
The costs of studying to keep existing knowledge up to date can only be deducted from the profit from business operations or whether it profit from other activities.
The deduction of expenses on wages from employment After all, this has not been possible since 1 January 2001. It is therefore most convenient for employees to have their employer cover these costs. For the employer, these are wage costs that may be charged to profit. The reimbursement of study costs or the provision of a study programme is tax-free. Provided the conditions are met, a specific exemption applies. The employer can cover the study costs in a cost-neutral manner by means of a so-called cafeteria scheme to apply. Our consultants We’d be happy to sort this out for you.