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Learning ‘should be tax free for all’


Sheena Sullivan, tax partner at accountants and business advisors, PKF, believes that the Government must provide fairer tax relief on training expenditure to ensure everyone is treated equally.

Employees whose training is paid for by their employers receive a wide range of tax-free training but this generous treatment does not extend to sole traders (the most common form of business ownership in the UK), partners and self-financing employees. In contrast to the generous tax relief given to employers, there is usually no tax relief where the employee pays for his or her own training even when it is relevant to the employment.

The tax relief available to sole-traders and partners for their own training is also significantly less generous than that available to employees receiving work-related training. There is also no tax relief for training or retraining for budding entrepreneurs wishing to start a business.

Sheena Sullivan said, "It is no secret that the skills shortage is one of the biggest factors stunting UK productivity. If the Chancellor really wants to help UK plc, he must look to provide fairer tax relief on training expenditure. People that want to learn should be encouraged, not penalised. Life-long learning should be supported with universal tax relief and this should also apply to individuals who want to finance their own training - particularly as they are not relying on the Government or their employer."

Companies with fewer than 10 employees represent 80% of all UK businesses and employ over half of the UK's workforce but they are less likely to provide off the job training or training that leads to a qualification (statistics from the Learning and Skills Council 2002).

- Smaller organisations train least frequently and least intensively. They are less likely to provide off the job training or training that leads to a qualification. With fewer than 10 employees they represent a significant 80% of all establishments.

- Skill gaps in all industries are being felt particularly at customer services level (24%), followed by shortages of operatives (16%) and administrative/secretarial staff

- Key sectors experiencing skills gaps are: manufacturing (20%), wholesale retail and hospitality (29%); finance and business services (17%)

- 21% of organisations with 5-24 employers cited the skills gap as a problem

- Communication skills were mentioned in relation to 61% of skill gaps overall Statistics from the Learning Skills Council

- There are 3.7 million SMEs in the UK

- SMEs employ 55.5% of the private sector workforce and account for 44.7% of business turnover

- SMEs employ 12 million people in the UK, three times as many as the FTSE 500

- UK SMEs' combined annual turnover is around £1 trillion Statistics from the Small Business Service


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