Motorsport sponsorship and tax
Discussion
I don't know what the limits are I'm afraid, stig. But I have an idea it'll be to do with whether tax was already paid on the money or not.
If a company sponsors a team/individual then the sponsorhsip amount is often tax deductible for the company - as a sort of "charitable donation" as it were. I would imagine that tax is then due on the "gift" - but payble by the sponsored body.
If I as a private individual sponsor a racing team to the tune of a few hundred quid - I will ALREADY have paid income tax on that money - and so I suspect tax is NOT then due on that amount.
As an individual making a charitable donation the charity can then sometimes claim back off the Inland Revenue the sum of tax that the individual paid.
Now what I hope one of lawyer friends might be able to answer is "sponsoring" the same as "charitable donation" etc etc..Sorry I can't be more help.
If a company sponsors a team/individual then the sponsorhsip amount is often tax deductible for the company - as a sort of "charitable donation" as it were. I would imagine that tax is then due on the "gift" - but payble by the sponsored body.
If I as a private individual sponsor a racing team to the tune of a few hundred quid - I will ALREADY have paid income tax on that money - and so I suspect tax is NOT then due on that amount.
As an individual making a charitable donation the charity can then sometimes claim back off the Inland Revenue the sum of tax that the individual paid.
Now what I hope one of lawyer friends might be able to answer is "sponsoring" the same as "charitable donation" etc etc..Sorry I can't be more help.
If you've got too much feel free to throw a company or two my way, I'll put it to damn good use out in Barbados! 
________________________________________________________
graeme finlayson | tyre warmer | fluke motorsport
graeme.finlayson@vicorp.com | www.fluke-motorsport.co.uk
Barbados Rally Carnival Experience
________________________________________________________
graeme finlayson | tyre warmer | fluke motorsport
graeme.finlayson@vicorp.com | www.fluke-motorsport.co.uk
Barbados Rally Carnival Experience
As long as the race team doesn't make a profit no tax should be payable by them. The donor company would also receive tax relief on the donation out of its "advertising" budget as long as the donation was within proportion to the profitability and turnover of the company. So if the donor was say a blue chip multi national they could in effect give millions, however Toms Garage round the corner can't trade purely to subsidise Toms motorsport hobby and avoid corporation tax by blowing all the profit on racing.
Also be very careful about any sponsorship that involves the Owner or a Director of the donor company actually driving as this can be viewed as a benefit in kind and becomes taxable on the P11D (or the bosses daughter being "sponsored" in the local gymcarner(sp?) and using company funds to pay for his horses) I managed to "self sponsor" and keep the tax man happy for years but only because I was racing Endurance and was one of 3 riders so could therefore show I wasn't a sole beneficiary (but a member of the team) so didn't declare it as a benefit in kind. It also helps if you can show that by racing you have secured new business of substance which I did. Like all things Tax if they want to clobber you they will but if you pay your share and smile they'll leave you alone.
Also be very careful about any sponsorship that involves the Owner or a Director of the donor company actually driving as this can be viewed as a benefit in kind and becomes taxable on the P11D (or the bosses daughter being "sponsored" in the local gymcarner(sp?) and using company funds to pay for his horses) I managed to "self sponsor" and keep the tax man happy for years but only because I was racing Endurance and was one of 3 riders so could therefore show I wasn't a sole beneficiary (but a member of the team) so didn't declare it as a benefit in kind. It also helps if you can show that by racing you have secured new business of substance which I did. Like all things Tax if they want to clobber you they will but if you pay your share and smile they'll leave you alone.
Interesting thread - I'm about to compete in my first year sprinting, and have secured some sponsorship - well, a few companies have agreed to pay for their own advertising on the car, without me actually taking any cash. I'm a non-exec director of one company - I hope this doesn't count as a benefit...
One other company is offering me a set of tyres for the year - so I can be heavy on the throttle and not worry about it! All I need now is for someone to pay my enty fees...
One other company is offering me a set of tyres for the year - so I can be heavy on the throttle and not worry about it! All I need now is for someone to pay my enty fees...
Had not even thought about this.
I am racing in Club100 next year (karting) my dads company has promised to pay our teams membership, so we can race under their name(TICCS) , which is only £50, with the possibility of paying for a couple of races which are £335 each so could mount up.
They may only pay for a couple of races but it is an eleven round championship.
>> Edited by Cotty on Monday 4th February 20:19
I am racing in Club100 next year (karting) my dads company has promised to pay our teams membership, so we can race under their name(TICCS) , which is only £50, with the possibility of paying for a couple of races which are £335 each so could mount up.
They may only pay for a couple of races but it is an eleven round championship.
>> Edited by Cotty on Monday 4th February 20:19
Cotty,
This has been discussed at C100 before. The consensus (backed by JV!) was that your sponsor can claim back the V.A.T. on any contributions (though obviously this is limited to the amount of VAT you are being charged by C100). In theory, you could get them to nominally pay ALL your costs, and come to some kind of "arrangement". Do you think they might want to sponsor TWO teams? :-)
This is ALL I know about this sponsorship/tax business. I think many of us would benefit from any kind knowledgable souls contributing more info here!
This has been discussed at C100 before. The consensus (backed by JV!) was that your sponsor can claim back the V.A.T. on any contributions (though obviously this is limited to the amount of VAT you are being charged by C100). In theory, you could get them to nominally pay ALL your costs, and come to some kind of "arrangement". Do you think they might want to sponsor TWO teams? :-)
This is ALL I know about this sponsorship/tax business. I think many of us would benefit from any kind knowledgable souls contributing more info here!
I'm joint owner of my business, and recently started spriniting.
I made a few vague enquiries regarding sponsorship, and one relevant piece of advice from a number of sources was that the company who is doing the sponsoring should be able to prove some sort of advertising/publicity benefit from the deal.
I made a few vague enquiries regarding sponsorship, and one relevant piece of advice from a number of sources was that the company who is doing the sponsoring should be able to prove some sort of advertising/publicity benefit from the deal.
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