Are marketing expenses tax deductible?

As an essential part of business, many marketing expenses can be taken off your tax bill. In this article, we'll look at what marketing expenses are – and aren’t – tax deductible.

Many marketing expenses are tax deductible as they are an essential requirement of running a business.

Business expenses involving advertising can often be taken off the amount of tax that you owe. And social media marketing tax deductions are another consideration. So, if you’re wondering how to legally pay less tax, these can be great options.

What are marketing expenses?

As a tradesperson, marketing helps increase your sales by sharing information about your products and services with a wider audience. Marketing helps you build the profile of your business by getting you noticed.

Setting up a marketing budget and deciding how much to spend is an important financial decision.

It’s helpful to know which marketing expenses are tax deductible. This means they can reduce the amount of tax you have to pay on your business income.

Tax-deductible advertising expenses and social media marketing tax deductions are treated similarly to marketing expenses.

You also need to be aware of which marketing expenses are not tax deductible. This is so you don’t include them when working out how much tax you need to pay.

HMRC’s rule on business expenses is that they should be ‘wholly and exclusively’ for work. This includes marketing.

It’s worth bearing this in mind when deciding what marketing expenses are tax deductible.

What marketing expenses are tax deductible?

Marketing expenses used to be mainly for printing items and placing adverts in publications. The internet created new digital marketing opportunities.

Promoting a business online is a popular choice for many tradespeople. It can be cost-effective and reach a wider audience than other marketing or advertising options.

These advertising and marketing expenses are tax deductible:

Mailshots and direct marketing

These are things like leaflets, flyers, and brochures that talk about your services or give details of new offers. They can be printed or digital. Tax-deductible expenses could include writing, designing, printing, and sending out material.

Belonging to a trade body

Subscription costs to join trade and professional bodies (such as APHC, NAPIT, NFB, BBSA etc) are considered tax-deductible expenses.

Subscriptions to trade journals

If you subscribe to a trade or professional publication, you can also treat this as a tax-deductible expense.

Social media

Costs relating to online marketing and advertising are tax deductible. Advertising on social media or internet sites like Google is treated in the same way as printed media when it comes to marketing expenses.

Advertising

Wondering whether advertising is tax deductible in the UK? Well, as well as paying for advertising in newspapers, publications, and directories, advertising on radio and TV is also tax deductible. Similarly, the costs of social media and online advertising are allowable business expenses.

Websites

For new business owners, setting up a website is key, and you might be curious to know if website costs are tax deductible. If you have a website that you use to advertise your business, it’s your digital ‘shop window’. And, costs related to designing, maintaining, and hosting your website are tax deductible expenses.

Sponsorships

In short, yes, sponsorship expenses can be tax deductible. Many tradespeople like to get involved in their local communities by supporting clubs, events, and charities through sponsorship. Sponsorship can generate vital publicity that boosts sales, where your details, logo and branding are prominently displayed at venues, in brochures, on clothing, and on websites.

What marketing expenses are not tax deductible?

It’s worth noting that not all marketing expenses can be deducted from your business income when calculating how much tax you have to pay. Below are a few examples of marketing expenses which you won’t be able to claim back.

Entertaining customers and suppliers

One area where there can be some uncertainty is if you entertain your customers or suppliers. For example, by taking them to lunch or dinner, or if you provide event hospitality, including food, drink, and accommodation.

You may be aiming to win business with these activities, but they are not tax-deductible expenses.

Donations to charities or political parties

Donations to charities are not tax deductible. Unlike charity sponsorship, your business isn’t getting anything in return by way of publicity for this type of expense. The same applies to political donations.

Free tickets as part of a sponsorship deal

Although sponsorship is tax-deductible, the sponsorship package you receive could include free tickets or a private box at a venue. These could be viewed as a benefit. As a result you might need to subtract their value from your marketing expenses.

Gifts

Business gifts given to customers or suppliers are not tax deductible. This is because your business isn’t getting anything in exchange for the gift.

An exception is if the gift clearly advertises your business, such as branded pens and diaries. Business gifts to charities are also usually tax deductible.

How to track your marketing expenses

There are various tools which can help you track your marketing expenses. These include handy templates and spending management systems.

A budget template can help you accurately track and monitor all your expenses. It also gives you a great point of reference for when you’re making expense-based decisions in the future.

Or, you could rely on a handy expense tracking management system. This is a system which allows you to track all your company expenses in one place.

It’s important to make sure you’re tracking your expenses diligently and accurately.

The importance of keeping accurate records

Like all business expenses, remember to keep a record of what you have paid for your marketing and advertising. Bookkeeping for small businesses and larger businesses is vital.

Well-kept records should make it easier to work out what tax-deductible marketing expenses you can offset against your business income.

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Marketing expenses FAQs

Why are marketing expenses tax deductible?

They are a necessary cost of running a business. Marketing activities aim to increase sales and drive up revenue.

Are the costs of entertaining my customers tax-deductible marketing expenses?

No. HMRC doesn’t allow these as tax-deductible marketing expenses.

Will the full amount of my marketing expenses be tax deductible?

Not always. Check carefully if any of your marketing expenses are not allowed to be deducted from your income for tax purposes. A good example is gifts. While business gifts in general are not tax deductible, gifts that prominently feature your logo and branding are.

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