ATSCo asks for contractors' training costs to be made tax deductible
A recommendation that all training expenses of independent IT contractors should be able to be offset against tax has been made by the Association of Technology Staffing Companies (ATSCo) in its pre-Budget submission.
ATSCo recommends that given the shortage of IT skills in emerging areas, incentives should be developed to encourage IT workers to enhance their expertise at the cutting edge of IT developments.
To keep abreast of new developments and update their expertise in an emerging area could easily cost an independent contractor over £5,000 per annum, says ATSCo.
Under ATSCo’s proposals all training would be allowable expenses for tax purposes. This would include not only specific technical training but also, for example, management skills, languages, proposal writing courses and "soft" skills courses. Such skills are essential to support the IT skills accrued by IT workers. They will help to ensure that their skills are marketed and exploited in the most productive manner.
ATSCo believes that this measure could also encourage those contractors who have threatened to search overseas for employment (in the wake of the income loss they have suffered through IR35) to stay in the UK, as easier access to ongoing training can offer them enhanced employment and career development opportunities by remaining here.
Ann Swain, Chief Executive of ATSCo, said: "We recognise that the Government is already taking some measures to bridge the IT skills gap but we feel that this additional training incentive for the 100,000 contractors in the UK would make a substantial difference in the areas where the skills shortage is most critical."
"The continual updating of skills is crucial to the success of the UK IT industry. We want the Government to recognise this through the tax system. We would also like to see a level playing field. Independent contractors will be at a significant disadvantage compared with those in employment, whose employers pay for training and get the cost deductible against their own corporation tax."
A PCG spokesman said: "This is a case of too little, too late. Of course, training should be a legitimate expense for small businesses in the knowledge based sector. People who operate in this cutting-edge discipline need to keep their skills and knowledge updated in the same way that a manufacturing small business keeps its equipment updated. For the Government to suggest that this is not a legitimate business expense is an indication of how little they understand the knowledge-based sector. Contractors aren't asking to be treated as a 'special case', they are seeking a level playing field with other businesses: training is a necessary part of it - but it is only one part of the big picture."
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Susie Hughes