Tax Relief On Conversions
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Tax Relief On Conversions
I know there have been a few posts regarding tax relief before, but I think this new situation is a bit different! Background: I'm an FAA qualified commercial pilot currently working in the UK on N-reg, who pretty soon will have to convert to JAA because of the latest wisdom to come across the channel.
As far as I can gather normally no tax relief is granted on flight training, and this is because it is normally not 'work related training' i.e. you are not working as a pilot yet so its not work related. I am working however, and EASA is now forcing me to do the conversions, so I think there is a case for claiming the costs back as work related training.
Does anyone who knows more about tax than me have any advice on this, or has anyone tested this out before?
As far as I can gather normally no tax relief is granted on flight training, and this is because it is normally not 'work related training' i.e. you are not working as a pilot yet so its not work related. I am working however, and EASA is now forcing me to do the conversions, so I think there is a case for claiming the costs back as work related training.
Does anyone who knows more about tax than me have any advice on this, or has anyone tested this out before?
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From a UK tax point of view I can't see a problem with this, the change of EEC (EASA) regulations simply putts you out of work unless you do the conversion training.
This makes this a legitimate business expense to enable you to continue working and so allowable against tax.
This makes this a legitimate business expense to enable you to continue working and so allowable against tax.
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There's tax and there's tax ....
If your business plan is to be a self-employed freelance pilot, and can demonstrate that to HMRC, then you can easily become registered for VAT and claim the VAT back on your training. This means that when you invoice your clients for flying services rendered, you will charge VAT and will have to submit regular returns for VAT. If you don't know what I'm talking about, get professional advice.
From an income tax point of view, obtaining tax relief for training, is very difficult and I would recommend professional advice from either Chartered or Certified Accountants.
I am not prepared to give such advice over a forum from someone whom I have never met.
If your business plan is to be a self-employed freelance pilot, and can demonstrate that to HMRC, then you can easily become registered for VAT and claim the VAT back on your training. This means that when you invoice your clients for flying services rendered, you will charge VAT and will have to submit regular returns for VAT. If you don't know what I'm talking about, get professional advice.
From an income tax point of view, obtaining tax relief for training, is very difficult and I would recommend professional advice from either Chartered or Certified Accountants.
I am not prepared to give such advice over a forum from someone whom I have never met.
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The advice from whirligig about seeking advice from an accountant is good, I work as a sole trader and the advice that I gave was based on my tax status.
I would avoid the VAT if you can as it provides you with a small amount of benift for (as a sole trader) a lot of paperwork.
I would avoid the VAT if you can as it provides you with a small amount of benift for (as a sole trader) a lot of paperwork.
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As a Chartered Accountant, I would say that the VAT route is the easier to do, IF, and only IF, (IFF, if you're a mathematician) you are going to be self-employed/freelance. With UK VAT at 20% , it ain't a trivial amount.
Reclaiming a tax allowance against your income tax is way tricky (technical term there). It would likely involve investigations from HMRC so you would need to ensure that you are within the regs. And those regs are a grey area and it can quite often depend on the whim of the individual Inspector. And that's when you need a professional behind you.
Reclaiming a tax allowance against your income tax is way tricky (technical term there). It would likely involve investigations from HMRC so you would need to ensure that you are within the regs. And those regs are a grey area and it can quite often depend on the whim of the individual Inspector. And that's when you need a professional behind you.
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OK thanks guys. I was referring to income tax as I don't know the ins and outs of VAT, but I will look into that also.
From what I have been reading whether you can claim or not seems to be a bit like the legal system in that if there is a no precedent set it may or may not work out in your favour and as Whirlygig points out that means an HMRC investigation, which does not sound like a barrel of laughs!
As this situation has just arisen because of the new EASA legislation I suppose it's unlikely to have been tested so far either...
From what I have been reading whether you can claim or not seems to be a bit like the legal system in that if there is a no precedent set it may or may not work out in your favour and as Whirlygig points out that means an HMRC investigation, which does not sound like a barrel of laughs!
As this situation has just arisen because of the new EASA legislation I suppose it's unlikely to have been tested so far either...
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I can't see that your situation is any different from people in lots of industry's that have been forced by new legislation to take training to comply with new regulations in order to keep working within the law.
It matters not if you are a plumber or pilot, training to comply with new legislation is a business expense.
I have found HMRC to be very understanding about this.
It matters not if you are a plumber or pilot, training to comply with new legislation is a business expense.
I have found HMRC to be very understanding about this.
