Last updated: 16 October 2026
Can a new company claim relief for training costs?
Usually, yes. A limited company can deduct the cost of training its directors and employees if the training is wholly and exclusively for its trade. The director or employee does not pay tax on it, because work-related training paid for by an employer is exempt from income tax and National Insurance. This also applies to training bought before the company starts trading, thanks to the pre-trading expenditure rules.
Pre-trading expenditure
Costs a company incurs in the seven years before its trade starts can be treated as if they were incurred on the first day of trading, as long as they would have been allowable had the trade already started. Training costs, software subscriptions, insurance and professional fees often fall into this category. Capital costs, such as equipment, are dealt with through capital allowances instead.
Who pays matters
| Who paid | Tax treatment |
| The company, after incorporation | Deductible for the company; exempt benefit for the director |
| The director personally, then reimbursed by the company | Deductible for the company if for its trade; reimbursement is tax-free |
| The director personally, before the company existed | Harder to claim; the company may reimburse or buy the course from the director, but take advice |
| A sole trader, for their own training | Allowed if it updates existing skills; not allowed if it gives skills for a completely new trade |
The rule for sole traders
HMRC updated its guidance in 2023. Sole traders can claim for training that maintains or updates the skills they already use, including keeping up with technology or new methods, even if it helps them expand their services. Training that equips them to start a new, unrelated trade is still capital and not allowable. This is one reason some people form a company before training.
Example
Josh plans to open a coffee roastery through a new limited company. Before trading starts, the company pays £3,000 for a roasting course for Josh and £1,200 for a food hygiene course for a new employee. Both costs are treated as incurred on the first day of trading and reduce the company’s taxable profits. At a 19% corporation tax rate, the saving is £798. Josh pays no tax on the training he received.
What counts as work-related training?
Courses, coaching, exam fees, study materials and related travel are covered if the training is linked to the job. Leisure courses, or training that is really a reward, are taxable benefits. Paying for a director’s MBA can qualify if it is genuinely for the business role, but HMRC may look closely.
Records to keep
Keep invoices in the company’s name, course outlines showing the link to the business, and board minutes approving larger courses.
Frequently asked questions
Is VAT on training reclaimable?
Yes, if the company is VAT registered and the training is for its taxable business. Some training providers are exempt from VAT.
What if the company never starts trading?
Pre-trading expenses only become deductible when trading starts.
Are apprenticeship costs deductible?
Yes, wages and training costs for apprentices are normal staff costs.
Can a company pay for training a director’s spouse?
Only if the spouse works for the company and the training relates to their role.
Related: deductible training costs, professional fees relief and choosing a business structure.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with new company set-up and tax relief. See our startup accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
