Advertising Costs – what can I claim as a business expense?

Knowledge base from Boox

By Jonathan London on 15th June 2015

Advertising Costs – what can I claim as a business expense?

Unless you’re lucky enough to have all the business you can handle land in your inbox, you’ll have to promote yourself.

In most cases, your advertising costs, marketing and promotion costs are deductible business expenses. There are, though, a few exceptions. So, before you commit to your next push, here is some help with what is and is not claimable.

What you can claim

The following costs are classed as tax deductible business expenses:

Advertising

You can claim for advertising in newspapers, magazines and other media such as radio, TV, cinema and outdoors. This includes the cost of designing, writing and producing your advertisements as well as the cost of placing them.

Direct mail

The same applies to bulk mailings. You can claim for designing, writing, printing and posting your promotional materials.

Free samples

If you produce free samples to give away and they show your logo, you can claim for the cost of producing and distributing these, too.

Website

Your company website is also a legitimate marketing and advertising tool. This means you can claim for the costs of setting it up and managing it. These include domain registration, hosting and design and development costs – here’s a quick guide on some options for setting up your own website.

Charitable donations and sponsorship

Donations to registered charities or community amateur sports clubs are deductible from the profit of your company.

The company can donate money, equipment or stock and gain tax relief, as long as you receive anything in return.

A charity sponsorship arrangement, on the other hand, is different. This is because the idea of it is to gain exposure and good PR for your business. You can claim for this if the charity:

  • publicly supports your products or services
  • lets you use their logo in your printed material
  • lets you sell your goods or services at their events or premises
  • links from their website to yours

What you can’t claim

The following costs are NOT classed as tax deductible business expenses:

Entertainment

The biggest no no when it comes to tax deductible advertising expenses is entertainment. You’re not allowed to claim for entertaining clients, potential clients or suppliers or for event hospitality. Nor can you claim the VAT back on any client entertaining. Client entertainment can be  be recorded as a cost to the company but it doesn’t reduce your tax bill.

The term ‘entertainment’ covers a multitude of things. Most typically, it means you can’t claim for food, drink, accommodation, entry to venues and events, use of capital assets and business gifts.

There are different rules for staff entertaining. You’re allowed to claim up to £150 per person (including VAT) towards rewarding employees and their partners (so £300 if partners come to an event). And be careful; if you claim just a penny over this limit the whole amount becomes a taxable benefit on the employee.

The rules for staff entertainment apply even if you are a one-person limited company but remember it has to be actual spend, it is not just a fixed allowance.

Donations

As we’ve already seen, you can’t claim for donating to a charity. The same applies to donating to political parties.

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