Income Tax (Trading and Other Income) Act 2005 section 22-23

Training courses for employees

Sections 22 and 23 of Schedule 2 provide transitional rules to preserve the tax treatment of employer-funded retraining courses that straddled the introduction of ITTOIA 2005, ensuring that earlier rules continue to apply where appropriate and that HMRC can still recover tax where retraining conditions are not met.

• Where the old ICTA rules on retraining courses were already operating for tax years before 2003-04 under savings provisions, the changes made by ITTOIA 2005 do not disturb that existing treatment for either the employee or the employer
• Where an employer paid or reimbursed retraining course expenses between 6 April 2003 and 5 April 2005 and claimed a tax deduction for those costs under the old rules, the transitional provisions protect both the deduction and the potential for tax recovery
• If no discovery assessment to recover tax had been made before 6 April 2005 in respect of an employee's failure to meet retraining conditions (such as starting a new job within a set period), the recovery mechanism in section 75 of ITTOIA 2005 applies to the employer as though all necessary conditions were satisfied
• In applying the recovery provisions, references to "the employee" mean the specific person for whom the employer incurred the retraining expenditure