Sponsorship is a tricky area with a number of potential pitfalls. Just like a huge number of expense claims you have to look at any potential sponsorship expense with common sense to understand how your limited company would receive tax relief.
Lets take two simple examples:
Background - You are a financial analyst contractor and your clients are major investment banks.
1. You sponsor your 6 year old sons small village rugby team.
2. You sponsor your local rugby team who play in a national league.
In example one it would be hard to argue that your business is gaining publicity to potential clients from the sponsorship of a small children's village rugby team. It would also be hard to argue that you are not personally receiving a benefit from the sponsorship. HMRC would disallow this as a tax deductible expense for your company and may try to charge you a Benefit In Kind Tax on the amount you paid.
In example two there is clear potential for your company to be getting publicity to potential clients. There is no benefit to you personally and therefore the expense is one of marketing and advertising and tax deductible.
For more detailed information on a range of expenses, take aloof at our guide to expenses.