Racing Sponsorship (no I'm not after it from you!)
Discussion
Folks, a little advice and/or personal insight if you please, and I hope you don't mind me cross posting from the Tuscan Challenge forum.
A quick bit of background, I'm very much a "club racer" ho finances most of my racing out of my own pocket, and I'm very much aware that budgets and the like vary immensely so the figures I mention may be loose change to some, however...
Say I landed a sponsorship deal worth £5k, £10k, whatever, a substantial sum of money, what's the best way to look after said sponsorship? Talking form a legal and especially tax point of view? I'm "self assessed" for all that's worth so if it went into a personal account I assume I'd be taxed accordingly, what if I set up a company, ACME Racing Inc or whatever? Would that be a better way to go?
Thoughts and advice welcome before I visit the accountant and lose the will to live
Regards
Iain
A quick bit of background, I'm very much a "club racer" ho finances most of my racing out of my own pocket, and I'm very much aware that budgets and the like vary immensely so the figures I mention may be loose change to some, however...
Say I landed a sponsorship deal worth £5k, £10k, whatever, a substantial sum of money, what's the best way to look after said sponsorship? Talking form a legal and especially tax point of view? I'm "self assessed" for all that's worth so if it went into a personal account I assume I'd be taxed accordingly, what if I set up a company, ACME Racing Inc or whatever? Would that be a better way to go?
Thoughts and advice welcome before I visit the accountant and lose the will to live
Regards
Iain
Being a director of a company that sponsors your own racing activities can be very expensive. HMRC treat this as a benefit in kind and will charge you accordingly. I know because it happened to me, we took them on and lost; this happened after I had stopped racing but they decided to backdate the charge to cover several years!
I had sponsorship from various sources before I became a director and HMRC were not interested in this period, just post appointment as a director.
Get some good and current advice.
I had sponsorship from various sources before I became a director and HMRC were not interested in this period, just post appointment as a director.
Get some good and current advice.
This has been discusssed quite a lot over the years on PH and what happened to
530dPHIL is no surprise.
Obviously, if you receive money from someone or some organisation to allow you to pay for your hobby, then are likely to have to pay tax on that income some point along the way.
Running your hobby through a company is frought with danger. For a start, the company itself will pay Corporation Tax on its profits. You will pay tax on what you draw from the company. And, even if you don't take any cash out of the company, as the company is there to support your personal lifestyle, and you are a director of the comapny, you will be subject to a Benefit in Kind charges (both tax and NI) on the value of the benefits provided by the company to you.
530dPHIL is no surprise.
Obviously, if you receive money from someone or some organisation to allow you to pay for your hobby, then are likely to have to pay tax on that income some point along the way.
Running your hobby through a company is frought with danger. For a start, the company itself will pay Corporation Tax on its profits. You will pay tax on what you draw from the company. And, even if you don't take any cash out of the company, as the company is there to support your personal lifestyle, and you are a director of the comapny, you will be subject to a Benefit in Kind charges (both tax and NI) on the value of the benefits provided by the company to you.
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