New to racing sponsorship and I need help!

[Jkirsopmaine]

I have recently started racing motorbikes and my boss wants to sponsor me for this year. We've already agreed to an amount but we need to know how to set it all up as its not something either of us has done before. As it stands at the moment, I am just an individual that is just paying out of my own pocket, no race team, no limited company, just an individual paying my own way.

We were hoping to just have the company pay for all the things I need (up to a point) and I just turn up and race, but do I need to set up a limited company first and actually invoice the company (the sponsor) for the amount i need? What do people normally do? I am struggling to get any advice or info from anywhere at the moment, all the info I see is about convincing someone to sponsor you and building proposals, but never the next step!

If it matters at all, I am fully employed by this company and they are VAT registered. The amount we are taking about is around 10k and its all expenses, nothing for me personally and nothing for anyone else (excluding purchases obviously). We just want to know where to start!

Thanks in advance!

[Crook]

I’m not on the same position however I would suggest your boss speaks to their accountant and see what they suggest: it may be that every race entry/accommodation/spares/etc. can be put down to promotion but someone internally would need to do the actual purchasing.

If you form a ltd company then it needs accounts doing etc. which is a cost. If you’re a director of that then there may be BIC issues (I’ve read this on other forums on here - no idea of true).

If it’s paid to you and you do the purchasing you’ll be taxed.

It may be easier if you can find a race team that can do your admin for want of a better term and hospitality for a fee then your boss just pays that company for promotion.

That’s what my sponsor does albeit I have some mechanical and logistic support too.

All the best with the racing

[Panamax]

Crook said:

If it’s paid to you and you do the purchasing you’ll be taxed.

Any business, whether in a limited company or otherwise, sets off "business expenses" against its "income" and is only taxed on the net profit. If this sponsorship is simply helping cover some expenses then I can't see any tax at all.

On the other hand if OP is doing this to create a net personal income there may be some tax on that net income.

If the company just pays for stuff I can't see any tax implications at all, so long as it's not instead of a pay rise!

Worth mentioning there are probably no VAT implications at this modest level.