Can I claim for advertising and marketing costs?
Answered 11 March 2026
Can I Claim for Advertising and Marketing Costs?
Yes, advertising and marketing costs are generally allowable as a business expense deduction, but subject to important conditions and limitations. Here is a structured summary:
What the Law Says
The fundamental rule is that no deduction is allowed for expenses not incurred wholly and exclusively for the purposes of the trade. This applies to all business expenditure, including advertising and marketing costs:
- For unincorporated businesses: S34(1)(a) Income Tax (Trading and Other Income) Act 2005
- For companies: S54(1)(a) Corporation Tax Act 2009
Where only part of an expense is wholly and exclusively for trade purposes, a deduction is still available for that identifiable proportion, under S34(2) ITTOIA 2005 and S54(2) CTA 2009.
HMRC Guidance / Practice
General rule — advertising costs are allowable revenue expenditure:
HMRC treats advertising costs as an example of an admissible expense in computing trading profits. The list of allowable expenses includes "advertising costs", but with the important caveat that "the cost of a permanent advertisement such as a hoarding attached to the business premises is excluded — this would be a capital rather than a trading expense".
Revenue vs. Capital distinction:
Not all marketing expenditure is revenue in nature. HMRC guidance makes clear that describing expenditure as "advertising" or "marketing costs" is not determinative of its nature. As noted in Strick v Regent Oil Co Ltd [1965]:
"to call such sums marketing costs is merely to apply a neutral or generic description which in no way distinguishes between payments of a capital nature and payments of a revenue nature."
Costs that create an enduring asset or advantage (e.g. building a website, permanent signage) are likely to be capital and not immediately deductible, whereas regular/recurring costs (e.g. updating a website display, placing newspaper adverts) are revenue and allowable.
Property businesses:
For landlords, revenue advertising costs (e.g. advertising for new tenants in newspapers) are allowable, but advertising to buy or sell a property is capital expenditure and not deductible for income tax purposes (though it may be taken into account for CGT).
The "wholly and exclusively" test — purpose matters:
HMRC will examine the true purpose of the expenditure. For example, where a director's powerboat carried a company advertising logo but the true purpose was personal use, the expenditure was not allowable as advertising.
Sponsorship costs used for business promotion/publicity are not disallowable in principle, but must satisfy the "wholly and exclusively" test — if there is any non-business purpose, no allowance is due.
Giving away goods/services as advertising:
The cost of giving away a business's own goods or services to advertise them to the public generally is not treated as disallowable business entertainment, and is therefore an allowable deduction.
VAT input tax on marketing costs:
For VAT purposes, the recoverability of input tax on marketing costs depends on whether those costs have a direct and immediate link to taxable or exempt supplies. Where marketing costs are linked to both taxable and exempt supplies (e.g. a retailer that also provides credit facilities), the costs may be residual and subject to partial exemption apportionment.
Summary
| Scenario | Treatment |
|---|---|
| Regular advertising (press, online, radio, TV) for trade purposes | ✅ Allowable revenue deduction |
| Permanent advertising structure/hoarding attached to premises | ❌ Capital — not immediately deductible |
| Advertising with a personal/non-trade purpose | ❌ Disallowed (fails "wholly and exclusively") |
| Giving away own goods/services to advertise to the public | ✅ Allowable (not business entertainment) |
| Advertising to buy/sell a property (landlord) | ❌ Capital expenditure |
| VAT input tax on marketing costs linked to exempt supplies | ⚠️ May require apportionment |
Citation sources
The costs of bringing into existence an asset or advantage of enduring benefit to the trade are capital. You will need to establish if the web site has the lifetime normally expected of a capital asset - see Anglo-Persian Oil v Dale [1931] 16TC253 (BIM35505). The regular update costs of the site are likely to be revenue expenses and the original cost of creation, capital. The taxpayer may describe the expenditure as advertising. Such description is not determinative, see for example Lord Morris’
Sometimes, a company may incur an expense that on enquiry is linked to the personal interests of the director. In this situation you should first consider whether the expenditure gives rise to benefits taxable on the director as part of their remuneration package. See EIM20001 onwards for further guidance on employment-related benefits. If the expense is taxable on the director as part of their remuneration package, then you should allow the deduction as part of the costs of employing the direct
Sponsorship costs are subject to the 'wholly and exclusively’ test as with any other expenditure. This means that if there is a non-business purpose to the sponsorship (even if there is also a business purpose) no allowance is due. See BIM37050 for guidance on purpose. The purpose or purposes of expenditure is a question of fact to be determined by the Tribunal, in cases of dispute. Further guidance on the type of evidence to look for is at BIM42565. For an example of where the Special Commissio
The list which follows and the information contained in NIM21012 onwards was to help HMRC advise the applicant about what was allowable as a deduction in computing profits. The applicant had to carry out the actual calculation, however. Unless the application was from a newly self-employed person, it was not usually necessary to calculate a net profit figure. Where, however, a Self Assessment and/or a Profit and Loss Account was not available, the following were examples of admissible expenses,
The cost to a business of giving away its own goods or services for the purpose of advertising those goods or services to the public is not business entertainment expenditure. The legislation says that expenditure will not be classed as business entertaining expenditure if the entertainment: (a) is of a kind which it is the trader’s trade/company's business to provide, and (b) is provided in the ordinary course of the trade either for payment or free of charge in order to advertise to the public
Revenue expenses of advertising for new tenants are allowable; for example, the cost of placing adverts in newspapers. But the landlord cannot deduct the cost if it is capital expenditure; for example, expenditure on permanent signs or other permanent equipment for displaying vacancy details. The expenses of advertising property to buy or sell is also capital expenditure and not allowable as a deduction for IT purposes. Such expenditure may possibly be taken into account for CGT purposes when th
This case concerned input VAT incurred on marketing costs by a fashion retailer who supplied its clothes over the internet or mail order and offered credit facilities to its customers. The business claimed that costs incurred in relation to marketing had a direct and immediate link to only their taxable supplies and therefore sought to recover the associated input tax in full. The First Tier Tribunal (FTT) found that there was a direct and immediate link between marketing costs and both taxable
There is nothing in S34(1)(a) ITTOIA 2005 and S54(1)(a) CTA 2009 about apportioning expenditure, for example allowing the ‘trade proportion’ only. On the face of things the statutory test is all or nothing. But you should not interpret S34(1)(a) ITTOIA 2005 and S54(1)(a) CTA 2009 as requiring that the whole of the expenditure be incurred wholly and exclusively for the purposes of the trade, profession or vocation. Where a definite part or proportion of an expense is wholly and exclusively laid o
The statute has, from the earliest days, included a rule restricting deductions to those incurred wholly and exclusively for the purposes of the trade. The words used have been subject to very little alteration over the years. The current form of words is in S34(1)(a) ITTOIA 2005 for unincorporated businesses and S54(1)(a) CTA 2009 for companies, which provide: In calculating the profits of a trade, no deduction is allowed for - expenses not incurred wholly and exclusively for the purposes of t