How to reclaim tax on self paid work training?

binladensgoat

I have two questions about tax.

First of all I work in IT, and after my lost job finished in March, I spent £5000+ of my savings with a view to helping me get my next job. How can I claim back the tax (presumably 20%) on this sum, as it is a work related expense? FYI although I have always been a salaried employee, I have to do my own tax every year as if I was a self employed person as I own a small house that I let out.

Secondly, I have heard that there are tax advantages to creating your own company, and making yourself an employee of that company. However, last year I made a huge loss on my let house which was also around £5000 (I had a lot of maintenance work done among other things). The £5000 loss I made is put aside by the Inland Revenue against future 'profits' that I make on the house. If I make a newly created company the 'owner'of the house, will I lose the right to put aside last years loss against future profits?

Thanks in advance for your help.

suso

basically you have decided to train yourself in order to get another job, or a better job.

It is not a work related expense, it is voluntary, no tax relief is appropriate.

Losses from renting out the property cannot be offset against employment income, as you already know it is offset against any future profits,

speak to a reputable accountant, but my gut feeling is you are heading for sticky waters if you try this.

jimmo

Basically, I agree with suso, but I think you need to separate the issues.
Letting income is non-trading income and whilst tax law is different for individuals and companies the effect is the same. Non-trading losses cannot be set against trading income. Also if you transfer the let property to a company, not only will your letting losses disappear but you will be liable to Capital Gains Tax on your personal disposal of the property to the company.
Looking now at your training expenses, suso is absolutely correct and a favourite saying among taxmen is that you cannot change history. You spent the money as an individual and no tax relief is due.
However there is a bit of a quirk in the legislation. No matter whether you are employed or self-employed, personal expenditure on self improvement is not allowable.
If you are employed and your employer pays for your training then the costs are allowable.
http://www.hmrc.gov.uk/manuals/eimanual/EIM01200.htm
You can't do anything about the £5,000 you have already spent but you might, possibly, develop a more tax efficient system for future expenditure by incorporating but I think you would be better off seeking professional advice rather than relying on a forum to plan that properly.

binladensgoat

Oh dear. Clearly I should have done the research prior to training. One thing I am not sure about though is how 'voluntary' this expense was. I did not ask for my contract to end, and by spending my own money I thought I was being proactive about getting another job in a difficult economic climate (which of course would also mean that I start paying the tax man again). If the tax man takes a narrower view though, then I suppose there is not much I can do...