With this in mind I was pleased to hear about the initiative by BIMA and TIGA, trade bodies for the digital creative industries, asking for the government to introduce tax breaks for small companies to invest in their talent by training it. To quote the BIMA blog:
We believe the launch of a pilot SME Training Tax Relief (TTR) scheme to promote skills, training, and productivity is vital to support the future of the creative industries, a sector worth £71.4 billion a year to the UK economy.How might such a thing work? After all, what your company spends on its business can be offset against tax already can't it?
There have been tax initiatives to help research and development for a while now, and they presumably provide a model. The basic idea is that for every pound you spend on whatever the scheme applies to, you can claim more than that amount against tax. For example, to quote HM Revenue and Customs ...
The tax relief on allowable R&D costs incurred on or after 1 April 2012 is 225% - that is, for each £100 of qualifying costs, your company or organisation could have its Corporation Tax profits reduced by an additional £125 on top of the £100 spent.There is a similar arrangement should you be making an accounting loss during that particular financial year.
This makes such a scheme attractive financially to a company. Clearly there will be strings attached. For example, in R&D, any intellectual property from the R&D has to belong to the company. With training you might find that it is a condition that anyone trained remains employed with the company for a certain time, so that both the employee and the company benefit from the training. As a slight aside, it has been suggested that training costs should be treated as a capital cost rather than expenditure, since the benefit can be seen to last well beyond the immediate period. At the moment, since as a small company you can offset 100% of capital costs (up to a limit) that wouldn't necessarily be a problem, but the revenue have said that such an interpretation would be 'difficult to imagine'. (See the document linked below.)
For the company, any tax relief will ameliorate the double whammy that (superficially) training staff has: you lose productive staff time and you have to pay for it. But training, especially if the courses include people from outside the immediate working environment, has additional benefits; bringing people together. It's the same with conferences: the time spent socialising is as important as the time spent in sessions.
A final hope, from me for obvious reasons, would be that online training would be eligible for tax relief as well as face-to-face training. This would be by no means a given, based on past experience, but for many activities such as programming, online training can be particularly productive.
As a final note, you should read this document from the revenue:
Sometimes, the government gets suggestions that employers should be given tax relief for the costs of training their employees. That surprises us, since except in cases where the employee has some link with the employer outside the employment itself, the disallowance of expenditure by an employer on staff training and development will be extremely unusual indeed.See ... even the tax man says you should go for it!
[PS: Full disclosure ... I used to be Chair of BIMA]