Corporation Tax Act 2009 section 1238

Retraining courses

Section 1238 allows companies with investment business to deduct the cost of retraining courses for current or former employees as management expenses, provided certain conditions are met.

• A company with investment business that pays for or reimburses retraining course expenses for a current or former employee may treat those costs as deductible management expenses.
• The retraining course expenses must satisfy the conditions set out in the employment income rules (ITEPA 2003, section 311), including specific requirements for any associated travel expenses.
• If a corporation tax liability for an accounting period was calculated on the basis that this deduction was allowed, but the conditions were not actually met, there are clawback provisions enabling HMRC to recover the tax.
• The deduction does not depend on whether the employee personally received an income tax exemption in respect of the same retraining expenditure.