Limited Company FAQ's

As a director of your limited company, you can get your company to cover some of the business-related entertaining expenses. Entertaining expenses cover things like treating clients or buying business-related gifts.

Yes, if the sponsorship is considered capital expenditure e.g., buying a racehorse or car) or if it falls under specific disallowed expenses like entertainment expenses.

Ideally, you should ensure that you have a written sponsorship agreement in place that details the sponsorship’s value, duration and expected return on investment.

Costs may be disallowed if you pay the sponsored party and there is no clear business benefit to the company.

HMRC considers the commercial benefit to your business, looking at factors like negotiation, location relevance, exploring alternatives, and the impact on your business trade.

Sponsoring a relative, close friend, or having a personal involvement in the sponsored activity could be seen as non-business purposes.

Yes, but you must establish that the sponsorship primarily benefits your business and you receive some business benefit in return.

HMRC is cautious to ensure that expenses claimed as sponsorship genuinely serve business purposes, preventing misuse.

If there’s a non-business purpose involved, you won’t be able to claim those costs as expenses.

Yes, but there’s a condition: sponsorship costs must be exclusively for business purposes to be tax-free.