Is coaching tax deductible? Can you offset coaching costs?

It’s one of the most common questions that business and executive coaches get asked by business professionals. So, I’m going to explain the situation.

Brighter Thinking Team

Is coaching tax deductible? Can you offset coaching costs?

It’s one of the most common questions that business and executive coaches get asked by business professionals. So, I’m going to explain the situation.

Brighter Thinking Team

If you work for yourself or for a business, you may have wondered whether having coaching is tax deductible. You’ve probably heard that coaching delivers tangible benefits and life changing results but are perhaps concerned by the costs, particularly if you’re thinking about having coaching long term.

If the costs could be offset against your business expenses and deducted from the tax you pay, it would make a significant difference. It would essentially mean that you could have coaching for free as a business expense.

And the good news is that in many locations, that’s exactly the case.

In the UK, things you do that improve the skills and knowledge that you use in your business are tax deductible. And this includes coaching. 

But there is one important caveat. The coaching or training you have must be focused on enhancing relevant business related skills, not learning something completely new or unrelated to your business. 

This means that whilst you can offset business or executive coaching that is clearly focused on your business and based on your existing skills and knowledge, you can’t offset the cost for any other kind of training or coaching that has less relevance to your usual business activities.

For example, if you’re an accountant, the cost of having executive coaching to enable you to perform better in your job would be allowable, however, having coaching or training to switch careers and become a chef for example wouldn’t.

So, you clearly have to think carefully about the type of coaching you have.

Business or executive coaching is obviously related to your business and your activities as a business professional. However, other types of coaching – such as life coaching – aren’t, as these largely focus on your non-professional activities.

Business coaching, as the name suggests, is squarely focused on helping business leaders make their organisation a success. The business coach will often be a very experienced business professional whose objective is to grow or increase the value of the company, sometimes regardless of the people within it. They are often considered to be consultants rather than coaches, taking on an advisory role and suggesting strategies for success.

By contrast, an executive coach is focused on the individual business professional within a company, helping them maximise their potential and gain new perspectives.

This can include helping them achieve clarity on their goals and objectives, and how they can perform far better in their job. 

Some executive coaches will be independently accredited experts in subjects such as Neuro-Linguistic Programming (NLP) and neuroscience and will have years of experience helping business leaders overcome self-sabotaging thought processes that are holding them back.

So, it’s easy to understand how both business coaching and executive coaching make a significant difference in the workplace and deliver benefits to the business. Hence, they qualify as allowable business expenses that can be offset against your tax. 

But when it comes to tax and understanding what is a permitted cost and what isn’t, there are different rules in different parts of the world, so talk to your accountant first.

And its worth considering what you want to achieve through having a coach and what type of coaching is right for you.

As covered in a previous post, there are many different types of coaching available and many different styles and approaches.

Whether you’re a business professional or not, coaching can transform the way you do things and how you see the world, making it a positive, powerful investment in your future.