Can I claim expenses for business coaching or mentoring?

Can I claim expenses for business coaching or mentoring?

Business coaching and mentoring have become mainstream tools for founders, freelancers, contractors, and growing teams. You might hire a coach to improve your pricing, marketing, leadership, productivity, confidence, sales process, or strategic decision-making. You might work with a mentor who has “been there before” and can help you avoid costly mistakes. The question that quickly follows is practical: can the cost be claimed as a business expense?

The honest answer is: sometimes, yes—but it depends on why you’re paying for it, what you actually receive, and how closely it relates to your existing business activities. Tax rules in many jurisdictions focus on the purpose of the expense and whether it is incurred “wholly and exclusively” for the business (or a similar test). Coaching sits in a grey zone because it can be both professionally useful and personally beneficial at the same time. This article breaks down how to think about the rules, what tends to be claimable, what commonly gets challenged, and how to keep records that make your position easier to defend.

Why coaching and mentoring are tricky from a tax perspective

Most business costs are straightforward: you buy stock, pay for software, rent an office, or hire a subcontractor. Coaching and mentoring are different because the “thing” you’re buying is often intangible. Sometimes you’re paying for business advice, strategy frameworks, accountability check-ins, or leadership training. Sometimes it includes personal development, mindset work, or confidence building. That overlap between “business improvement” and “personal improvement” is why tax authorities and accountants treat coaching as an area that needs careful analysis.

Tax rules typically disallow costs that are personal in nature, even if a business owner believes they indirectly help the business. For example, general self-improvement, lifestyle coaching, therapy, or costs to help you feel better might be personally valuable, but they are not automatically business expenses. To claim coaching, you need to be able to explain how it supports the business, what business outcome it targets, and why it is an expense of running the business rather than an investment in you as a private individual.

Start with the purpose test: what problem is the coaching solving?

When deciding whether coaching or mentoring costs are claimable, the most useful first step is to define the business purpose in plain language. Ask yourself:

Is this coaching directly linked to generating business income, improving business operations, or maintaining existing profits?

Or is it more about personal growth, confidence, relationships, wellbeing, or a broader career change that could apply to any job or even life outside business?

A business-focused purpose might be: “Improve the sales process for my existing service business,” “Build a marketing plan and implement it,” “Develop management capability to lead my existing team,” or “Improve productivity systems to deliver client work faster.”

A personal purpose might be: “Find my life purpose,” “Build self-esteem,” “Work through anxiety,” “Improve relationships,” or “Become a better person.” These may still benefit your work, but the link to the business is often too indirect to be treated as a business expense.

In borderline situations, the details matter. For example, “confidence coaching” might be disallowed if it’s framed as personal development, but it could be more defensible if the content is clearly tied to business outcomes like sales calls, pitching, negotiation, leadership performance, or public speaking for client acquisition, and your records reflect that.

Coaching that is more likely to be claimable

While there are no universal guarantees, coaching and mentoring tend to be more defensible as business expenses when they look and feel like ordinary commercial support services that an established business would buy to operate or grow.

1) Coaching linked to current business activities

If your business already trades and the coaching is designed to improve how the existing business runs, you have a stronger position. Examples include:

Sales coaching focused on objection handling, pipeline management, or closing techniques for your current offer.

Marketing coaching to build campaigns, refine messaging, improve conversion rates, or optimize lead generation for the current business.

Operational coaching to create systems, workflows, and service delivery improvements.

Leadership coaching for managing staff, improving performance reviews, or handling conflicts in your current team.

Pricing coaching to restructure packages, improve profitability, and implement price increases for your existing services.

In these cases, you can often argue that the coaching is a professional service purchased for the business, similar to a consultant or trainer, especially if the coach provides structured materials, measurable deliverables, or a defined program aligned with business performance.

2) Mentoring tied to a specific business project

Mentoring that supports a defined business project can be easier to justify. For instance:

Guidance on launching a new product line within an existing business.

Support during a business expansion, hiring push, or new market entry.

Advisory sessions on improving financial controls, budgeting, or forecasting.

Mentoring to negotiate a contract or tender process.

The key is that the mentoring is connected to a real business project rather than general “be a better entrepreneur” support. Project-based records—meeting notes, action plans, deliverables—help demonstrate the link.

3) Professional training content that updates existing skills

When coaching is essentially training that updates or improves skills used in your current trade, it can be more likely to qualify as an allowable expense. Many tax systems distinguish between training that maintains or improves existing skills (more likely allowable) and training that creates a new capability or prepares you for a new trade (more likely disallowable or capital in nature).

For example, a consultant hiring a coach to improve presentation skills for client workshops is arguably improving a skill used in the current business. However, coaching that trains someone to become a coach themselves, or to switch industries, can look like a new venture or new profession rather than a cost of the current business.

Coaching that is more likely to be challenged or disallowed

Coaching expenses can become risky when the business link is vague, personal, or tied to starting a completely new venture. Here are common red flags.

1) Life coaching, wellbeing coaching, or therapy-like support

If the coaching is aimed at personal wellbeing, emotional health, relationships, confidence in general, or life direction, it can look personal. Even if you believe it helps you perform better at work, the expense may be treated as private. If sessions resemble therapy or personal counselling, or if the program is marketed as personal transformation rather than business development, the business-expense argument becomes harder.

2) Coaching that prepares you for a new career or trade

Coaching that helps you pivot into a new line of work can look like an investment in a new profit-making activity. Some tax rules treat pre-trading costs differently, and some treat “new skill” or “new trade” costs as not deductible against current trading income. If you are paying for coaching to leave your current industry and start something else, expect scrutiny.

3) Mixed-purpose programs with significant personal benefits

Many premium programs combine business strategy with mindset, personal growth, lifestyle design, or wellness. If the program includes retreats, personal breakthroughs, relationships coaching, fitness elements, or spirituality, the personal element may be significant enough that the cost is partly or wholly disallowed. Even if the program also includes business content, tax authorities may argue that the expense is not exclusively for business.

4) Expenses that look like holidays or luxury consumption

Some coaching packages include destination retreats, “mastermind” travel, resorts, leisure activities, or luxury experiences. Even if there is a business agenda, costs that appear recreational or holiday-like can be challenged. The more the package includes leisure and non-business elements, the more difficult it is to claim without careful allocation and documentation—and in some cases, the safest approach is to treat the personal elements as non-claimable.

Business coaching vs. consulting: why labels matter less than substance

Many people assume “consultants are deductible, coaches are not.” In reality, labels matter far less than the substance of what you receive. Some coaches deliver highly structured commercial advice that is similar to consulting: growth strategy, sales scripts, marketing plans, hiring frameworks, KPI dashboards, and implementation support. Some consultants deliver motivational accountability and leadership development. What matters for deductibility is the business purpose and the nature of the service, not what the provider calls themselves.

That said, the way the service is described on the invoice, contract, and marketing materials can influence how the expense looks on review. An invoice that says “business coaching for improving sales conversion for XYZ Ltd” is easier to defend than an invoice that says “life coaching package.” You should not misdescribe the service, but you can make sure the description accurately reflects the business-focused scope if that is genuinely what you purchased.

Is coaching a revenue expense or a capital expense?

Another angle is whether the cost is a day-to-day operating expense (often deductible in the year paid) or something more like a capital investment (sometimes not immediately deductible, or treated differently).

Coaching that supports ongoing operations—improving systems, sales performance, leadership effectiveness, or marketing—usually looks like a revenue expense. Coaching that is part of setting up a new business, creating an entirely new income stream, or acquiring a “new capability” may be treated as capital or pre-trading, depending on local rules.

In practice, many small businesses simply treat coaching as an operating expense, but if you’re paying a large amount for a program that is clearly about launching a new venture, it is wise to get tailored advice from an accountant. The goal is not only to be correct but to avoid unpleasant surprises if the claim is reviewed.

What about masterminds, memberships, and group programs?

Group coaching, mastermind memberships, and business communities are common. From a tax perspective, these can be claimable if they are primarily business-focused and relevant to your current trade. Examples might include a membership that provides business training sessions, networking with peers in your industry, accountability calls, and templates for marketing and operations.

However, group programs often include extras such as retreats, social events, awards dinners, or lifestyle perks. If there is a clear split between business training and personal or entertainment elements, you may need to allocate costs. If the provider does not break down the fees, you can still make a reasonable allocation based on the facts, but you should document your methodology and retain evidence. In some cases, the safest route may be to claim only the portion clearly tied to business training and treat the rest as personal.

Coaching for employees: is it different?

If the business pays for coaching for employees (including directors who are also employees), the analysis can change. Training and development costs for employees are often easier to justify as business expenses because they are incurred to improve staff performance. Leadership coaching for a manager, sales coaching for a sales team, or productivity coaching for operational staff can look like normal staff development.

Even so, there may be separate rules about whether the coaching is a taxable benefit to the employee. If the coaching provides primarily personal benefit, it might be treated as a benefit-in-kind or employee perk rather than a business training cost. If the coaching is clearly job-related, it is more likely to be treated as a business expense without creating personal tax consequences, but the exact treatment depends on your jurisdiction and the nature of the arrangement.

How to strengthen your position if you claim coaching costs

If you decide the coaching is a legitimate business expense, the next step is to make it easy to justify. Good record-keeping is your best friend. Here are practical steps that help demonstrate business purpose.

1) Keep a clear contract or engagement letter

Where possible, have a written agreement that describes the scope of services in business terms. It might list objectives such as improving sales, creating marketing systems, developing leadership capability, refining pricing, or implementing operational processes. A short email exchange confirming the business focus can also help if there is no formal contract.

2) Ensure invoices accurately describe the service

The invoice should be addressed to the business (correct legal entity name) and should describe the service accurately. If the program is business coaching, the wording should reflect that. Avoid vague descriptions like “personal coaching” if the content is business-specific. Again, the key is accuracy, not spin.

3) Retain materials and deliverables

Save worksheets, recordings, slide decks, templates, action plans, strategy documents, or any deliverables provided. These show that the service is commercial in nature and tied to business performance.

4) Take notes that connect coaching to business actions

This does not need to be elaborate. Even a simple document with dates, session topics, and actions you took can help. For example: “Session 3: revamped discovery call script; implemented new follow-up sequence; improved conversion.” Notes like these show that the coaching relates to running the business.

5) Avoid paying for personal extras through the business

If the program includes optional add-ons like wellness components, therapy sessions, or purely personal retreats, consider paying personally for those components. When personal items are paid through the business account, it creates a messy picture that can undermine the claim for the business-related parts.

Mixed-use situations: can you claim part of the cost?

Sometimes coaching is genuinely mixed. Perhaps you join a founder program that includes business strategy and mindset coaching. Or you work with a coach who supports both your leadership performance and your personal confidence. In these cases, some businesses try to allocate the cost between business and personal use.

Whether partial claims are acceptable depends on local rules and the specific facts. Some systems are strict: if an expense has dual purpose and cannot be separated, it may be disallowed entirely. Others allow apportionment where there is a reasonable basis for splitting business and personal components.

If you choose to allocate, keep a written explanation of how you arrived at the split. For instance, you might allocate based on time spent on business modules versus personal modules, or the provider’s breakdown if one exists. The more objective your method, the more credible your position will be.

What if coaching is part of starting a business?

Many people hire a coach when they are transitioning from employment to self-employment or launching a new business. This raises an important question: are you already trading, or are you still preparing to trade?

In many tax systems, costs incurred before a business begins trading may be treated differently. Some jurisdictions allow certain pre-trading expenses to be claimed once the business starts; others restrict what can be claimed; and some treat start-up costs as capital. The right treatment can depend on the timeline, whether there is evidence of trading activity, and the nature of the expense.

Coaching during start-up can also look like “training to enter a new trade,” which is often treated less favorably than training to improve an existing trade. If you are hiring a coach primarily to help you choose a business idea, build confidence to leave your job, or reinvent your career, the cost is more likely to be viewed as personal or capital. If you are already trading and the coaching is about improving operations and revenue, the case is stronger.

How the structure of your business can affect the outcome

The same coaching program might be treated differently depending on whether you operate as a sole trader, partnership, or through a limited company (or equivalent corporate structure). The reason is that the legal relationship between you and the business changes.

In a sole trader structure, you and the business are essentially the same person for many tax purposes, so it is easier for tax authorities to argue that coaching is personal. You need to show the coaching was incurred for the trade, not for you as an individual.

In a company structure, the company is a separate legal entity. The company may pay for coaching because it benefits the business by improving director performance or leadership capability. But company payments can raise questions about whether the director is receiving a personal benefit. The expense might still be deductible for the company, but it could create a taxable benefit for the individual if the coaching is not wholly work-related. The details of employment status, job duties, and the coaching content matter.

This is an area where tailored advice can save money, because the “right” approach may involve a particular way of structuring the arrangement and documenting the business rationale.

VAT or sales tax considerations

If your business is registered for VAT (or a similar consumption tax) and you pay for coaching, you may wonder whether you can recover VAT on the purchase. Generally, VAT recovery follows the same logic: you can usually reclaim VAT on business purchases, but not on personal purchases. If the coaching is wholly for business purposes, reclaiming VAT may be straightforward. If the coaching is mixed-use, VAT recovery may need to be restricted or apportioned.

Also note that coaching providers may be in different countries and may not charge VAT in the way a domestic supplier would. Cross-border rules can be complex, especially for digital services, memberships, or platforms. Keep invoices and evidence of the supplier’s VAT status, and seek advice if the amounts are significant or if you buy from overseas providers.

Common examples and how they might be viewed

Below are practical scenarios to illustrate how the analysis works. These are not guarantees, but they show the types of factors that influence deductibility.

Example 1: Sales coaching for an established freelancer

A freelance designer hires a coach to improve discovery calls, pricing, and proposal conversion for their existing design services. The coach provides scripts, feedback on proposals, and a process to improve conversion rates. This looks closely linked to generating income and improving the existing trade. It is often easier to justify as a business expense.

Example 2: Life coaching to “find direction”

A business owner hires a coach to explore life goals, reduce stress, and build confidence. Sessions focus on mindset, relationships, and wellbeing. Even if the owner feels it helps them show up better at work, the content is personal. This is commonly challenged as non-deductible.

Example 3: Leadership coaching for a director managing staff

A company pays for leadership coaching for a director who manages a growing team. Sessions focus on delegation, feedback, performance management, and team structure. This may be a legitimate business expense because it improves leadership performance for the company. Depending on jurisdiction, it may or may not create a personal benefit tax issue, but the business case is stronger if the coaching is job-related and documented.

Example 4: Coaching to start a new business while still employed

An employee pays for a “start your own business” coaching program while still in employment, before any self-employment begins. The program covers choosing a niche, building confidence, and learning to market. This is more likely to be treated as personal or pre-trading rather than an expense of an existing business.

Example 5: Mastermind with a retreat component

A business owner joins a mastermind that includes monthly business training calls and one overseas retreat with leisure activities. The monthly training calls may be business-related, but the retreat component may be partly personal/entertainment. A partial claim might be possible if there is a clear breakdown and documentation, but it is also a common audit target. Some owners choose to claim only the business training component and pay for the retreat personally to reduce risk.

How to talk to your accountant about coaching claims

If you’re unsure, a short conversation with an accountant can clarify your position. To make that conversation effective, come prepared with:

A description of your business and what you sell.

The coach’s name, website or program outline, and what the sessions cover.

The reason you engaged the coach and the outcomes you were targeting.

Whether you are already trading and how long the business has been operating.

Invoices, contracts, and any deliverables or materials.

Whether there are personal elements like retreats, wellbeing coaching, or lifestyle content.

Your accountant is not just deciding whether to “put it through.” They are helping you assess risk and choose a defensible treatment. Sometimes that means claiming it; sometimes it means claiming part; sometimes it means treating it as personal. The right answer often depends on the balance of business versus personal benefit and the quality of evidence you can provide.

Practical do’s and don’ts

Do

Do ensure there is a clear business rationale tied to your current trade.

Do use business funds only for genuinely business-focused coaching.

Do keep invoices, contracts, and program outlines.

Do keep notes showing how coaching translated into business actions.

Do consider separating personal add-ons and paying for them personally.

Do ask for an invoice description that accurately reflects the business service provided.

Don’t

Don’t assume that “it helps my business” automatically makes it deductible.

Don’t mix holidays, leisure, or lifestyle retreats into a business claim without clear support.

Don’t claim therapy-like or wellbeing coaching as a business expense without specialist advice.

Don’t claim coaching to start a new career as if it were a cost of your current trade.

Don’t ignore the potential employee benefit implications if a company pays for coaching for directors or staff.

What to do if you’ve already claimed coaching and you’re worried

If you claimed coaching costs in the past and now you’re concerned they might not be allowable, you have options. First, review what the coaching was for and what evidence you have. If the coaching was clearly business-related and you have documents to support that, you may be fine.

If, on reflection, the coaching was primarily personal, you can discuss with your accountant whether an adjustment is needed. The right approach depends on your jurisdiction, how returns are amended, and the amounts involved. The important point is not to panic. Many expenses sit in grey areas, and the outcome often depends on facts and documentation rather than one absolute rule.

Key takeaway: focus on business purpose and evidence

Business coaching and mentoring can be legitimate business expenses when they are closely connected to running and improving an existing business. They become risky when they drift into personal development, wellbeing, or preparation for a new career or trade. The most important principles are clarity of purpose and quality of evidence: be able to explain why the coaching was necessary for your business, what it covered, and how it related to earning or protecting business income.

If you treat coaching as you would any other professional service—define the scope, keep documentation, and separate personal benefits—you put yourself in the strongest possible position to claim the expense appropriately and confidently.

Final checklist before you claim

Before you put the cost through your business, run through this checklist:

1) Is the coaching primarily about improving my existing business activities rather than my personal life?

2) Can I describe the business purpose in one sentence without mentioning personal wellbeing or life goals?

3) Do I have an invoice in the business name with an accurate description?

4) Do I have supporting materials, deliverables, or a program outline that shows business content?

5) If there are mixed elements (retreats, lifestyle, wellbeing), can I separate and document the business portion?

6) If my business is a company, have I considered whether there is any taxable benefit issue for the individual receiving the coaching?

If you can answer these comfortably, coaching and mentoring costs are often easier to justify as business expenses. If you struggle to answer them, it may be a sign that the cost is personal, mixed, or start-up related—and worth discussing with a professional before claiming.