HMRC Clarification on Driver CPC and Taxation
13/6/2010
There is still a great deal of confusion within our industry regarding where individuals and employers stand regarding tax relief for undertaking Driver CPC training.
We contacted the HM Revenue and Customs to clarify the situation and they provided us with the following statement:
“There is a specific tax exemption which applies when an employer provides or pays for an employee’s work-related training, or reimburses work-related training expenses incurred by an employee. So in cases where the employer pays for a professional driver to undertake 37 hours of verifiable training to obtain a driver certificate of Professional competence (CPC) the employer’s payment will not give rise to a tax liability. The employer can also deduct these expenses from their business.
If the driver has to meet the cost out of his or her own pocket, with no reimbursement from their employer, the position is different. Employees are entitled to tax relief only for expenses incurred "wholly, exclusively and necessarily in the performance of” their employment duties. The courts have repeatedly confirmed that expenditure on training is not incurred “in the performance of” an employee’s duties, but only to put them in a position to perform their duties. It follows that a driver who have to pay for their own training, without any reimbursement from their employer, are not entitled to tax relief for the cost.
In the case of the self-employed, only those expenses which are incurred wholly and exclusively for business purposes may be allowed as a deduction in calculating business profits. When a self-employed person spends money on maintaining or updating existing skills, knowledge or expertise they will normally be able to claim a deduction for those costs incurred. If however, the training they are undertaking is intended to give them a new skill or expertise it is unlikely that it will be considered an allowable expense for tax purposes”
