Tax advice needed on Sponsorship rules?
Discussion
HI to everyone,
I wonder if there are any tax experts that might be able to help clarify something?
Me and my partners are two 50% shareholders and directors in an IT services company (although we have other people employed as well).
We are intending to enter a race car into a race series next year and I'm wondering if we are 'allowed' to sponsor that car (in hope of declaring this as advertising expense).
It will not be too difficult to prove that we will have commercial gain by displaying our logo/website on the car, but I'm being told very contradictory things as to whether we can sponsor an activity in which we intend to participate as well?
Any help greatly greatly appreciated!!
Cheers,
Dylan
I wonder if there are any tax experts that might be able to help clarify something?
Me and my partners are two 50% shareholders and directors in an IT services company (although we have other people employed as well).
We are intending to enter a race car into a race series next year and I'm wondering if we are 'allowed' to sponsor that car (in hope of declaring this as advertising expense).
It will not be too difficult to prove that we will have commercial gain by displaying our logo/website on the car, but I'm being told very contradictory things as to whether we can sponsor an activity in which we intend to participate as well?
Any help greatly greatly appreciated!!
Cheers,
Dylan
It's that old perennial question - how do I use my own business to sponsor my hobbies and obtain tax relief on the expenditure at the same time.
The answer is, you can, but the net tax saving (if you are honest) is marginal or non-existent.
Scenario 1 - you decide to sponsor a local professional sports man or woman. You pay for his kit - he puts your company logo on the kit in return. That expenditure is legitimate advertising/sponsorship. You can claim it as a business expense in your accounts. The sportsman should, of course, declare the income he receives from you as part of his overall income as a professional sportman.
Scenario 2 - you, as an individual, are that sportsman. Your trading company pays to subsidise YOUR sporting activity. The business CAN claim it as a business expense BUT YOU must either return the money as personal income to you on your Self Assessment tax return or, if you are a director, declare it as a Benefit in Kind on a P11d in which case you will pay additional PAYE on tha sponsorship amount (and NI possibly).
The answer is, you can, but the net tax saving (if you are honest) is marginal or non-existent.
Scenario 1 - you decide to sponsor a local professional sports man or woman. You pay for his kit - he puts your company logo on the kit in return. That expenditure is legitimate advertising/sponsorship. You can claim it as a business expense in your accounts. The sportsman should, of course, declare the income he receives from you as part of his overall income as a professional sportman.
Scenario 2 - you, as an individual, are that sportsman. Your trading company pays to subsidise YOUR sporting activity. The business CAN claim it as a business expense BUT YOU must either return the money as personal income to you on your Self Assessment tax return or, if you are a director, declare it as a Benefit in Kind on a P11d in which case you will pay additional PAYE on tha sponsorship amount (and NI possibly).
My take on this, and this has been confirmed after a fight with the revenue, is that if you are building this car as a "promotional vehicle" and as sole sponsors (i.e your logo is plastered all over the car), then you can set the whole cost of the car, and it's running costs, against tax. And, as it will in effect be a "pool" car- ie no one can take it home at night then you won't hvae to declare it on your P11d as BIK!
you should probably check this with your accountant but it works for us.
you should probably check this with your accountant but it works for us.
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