What is taxable income?

Taxable income is your gross income after deducting your company expenses. Even if your turnover is high, your taxable income decreases as your expenses increase. As in the example below, your taxable income is calculated by subtracting your expenses from your turnover.

Are advertising costs tax deductible?

Almost all advertising costs are tax deductible. Advertising expenses are actually magic expenses. It helps you grow your business and take it to the next level. And the good news is whether you are self-employed or a limited liability company, your expenses such as branding, website design, SEO, print and digital promotion are tax deductible.

1. Consultancy

Digital marketing consultancy can include a wide range of activities, such as creating and implementing digital marketing campaigns, conducting market research and analysis, and developing and managing websites and social media accounts. Digital marketing consultants are experts in the field of online marketing and can help businesses to improve their online presence and reach a wider audience. They can also provide advice on how to use various digital marketing tools and techniques, such as search engine optimisation (SEO), email marketing, and content marketing, to achieve their marketing goals. By using a digital marketing consultancy, businesses can gain access to the knowledge and expertise of experienced professionals who can help them to successfully navigate the complex world of online marketing.

Due to the rise of e-commerce and online opportunities, many companies in the UK are managing their digital marketing on their own. As a result, this increases the demand for marketing consultants to review their marketing strategies and oversee their campaigns. This demand has greatly increased the value of the services of digital marketing agencies which provide bespoke solutions. Traditionally, digital marketing consultancy is offered by large firms and branding agencies and requires a large budget. Now, the new age provides a new generation of customised bespoke services that fit all types of businesses, including startups and small companies.

2. Re-branding

Re-branding basically renews the image of your brand or makes it suitable for the new sector or service areas you are investing in. Re-branding is often undertaken when a company has undergone significant changes, such as a merger or acquisition, or when it wants to reposition itself in the market or the brand's identity doesn't represent its products and services well enough. Re-branding can also be used to differentiate a company from its competitors, or to refresh the brand's image in the eyes of consumers. The process of re-branding can be complex and time-consuming, and often involves conducting market research, developing a new brand strategy, and implementing the changes across all of the company's marketing materials and channels. Ultimately, the goal of re-branding is to create a stronger, more cohesive brand that resonates with customers and sets the company apart in the marketplace.

The most controversial item among marketing expenses is re-branding. Be sure to check with an accountant that you can deduct your re-branding expense from tax. Because some re-branding expenses are considered assets, while others are considered capital.

In the United Kingdom, the tax treatment of re-branding costs will depend on the specific circumstances of the business and the nature of the expenses incurred. In general, expenses that are considered necessary and ordinary for the operation of a business are typically tax deductible. This means that if a business incurs costs in connection with re-branding that are deemed to be necessary for the operation of the business, such as the costs of updating marketing materials or redesigning the company website, those costs may be tax deductible. However, the rules and regulations around what qualifies as a deductible business expense can vary depending on the specific situation, and it is always best to consult with a tax professional or the relevant tax authority to determine the tax treatment of re-branding costs in the UK.

3. Web design & development

If your company doesn't have a website, don't wait any longer. Whether you're a small business or a local business, a well-designed website can help you grow your business.

Invest in a website so that your customers can recognise your brand, shop online, and book your services. You can actually make these investments very affordable by deducting the cost of the website from your taxes.

Everything has been transformed in this digital age. Websites and companies' digital investments have become more important than any other investment.

How to deal with website costs well? Do they count as advertising costs tax deductible?

Don't get stuck in the terms but these are the two key terms that people want to talk about and the reason for that is that they're treated in two different ways. Now if you create a website, so let's say you spent 15 grand on a web store that's going to last a few years, it's going to perform a function, it's going to bring future revenues into the business and as such what happens is that it is recognized as an asset. It's something your company owns, that's going to generate this kind of money later on down the line and as a result, what happens is that when you put it into your books, you want to put it in what's known as your balance sheet

If you're working with an accountant or even if you're doing it yourself, just make sure you put in your description website costs or something like that, so it's really clear what that is, because there's nothing worse than having a massive load of expenditure and not knowing what it all is at a later date when you get around to do those accounts. So bear that in mind now. I suppose the big question is: "should it go there". Well, think about it. You're creating this asset that's going to last a few years and generate future money. This will be seen by revenue and customs as creating a shop window. What you're doing by spending money on developing this website is creating an asset (your website is your shop window) like we just described and it's going to go on that balance sheet in the most general of circumstances.

4. SEO, PPC and Digital Advertising costs are tax deductible

Search Engine Optimisation, or SEO, is actually the modern expression of the race to be shown in the first place on google. Companies invest in their websites to be displayed in the first place on google. The websites that make this investment in the right way are shown in the first place in the targeted keyword and reach more customers.

Your SEO and digital marketing expenses are your daily, weekly, and monthly advertising expenses. It is no different than advertising in a magazine. They are solely advertising costs tax deductible.

Digital marketing investments to grow your business are generating leads and are fully tax deductible. The costs associated with search engine optimisation (SEO) may be tax deductible as a business expense in the UK. This means that companies can claim a tax deduction on the cost of improving their website's ranking on search engines like Google and Bing. This can help to reduce the overall tax liability of the company and provide a financial incentive for businesses to invest in SEO. It is important for businesses to keep detailed records of their SEO expenses, including the cost of hiring an SEO agency or purchasing SEO software, in order to claim the tax deduction.

5. Brochure, Flyer and all printed advertising

No matter how important it is to advertise in digital media, traditional advertising methods are also very important, especially in the United Kingdom. One of the most effective ways to reach your customers is to send brochures and flyers. Want to take advantage of this advertising opportunity in a much more affordable way?

Advertising and promotional expenses are generally tax-deductible as business expenses. Of course, printed promotional items such as flyers, brochures, and catalogues are tax deductible. Both the designs and shipping costs of flyers, brochures or catalogues are also tax deductible.

All your advertising expenditures, such as design, printing and distribution, can both increase the awareness of your company and accelerate the sale of your products and services. Moreover, you can make this cost much more affordable by deducting it from taxes.

6. Outdoor advertising

You can place outdoor advertisements at the points where your potential customers will pass, such as billboards, metro stations, buses, etc to make your brand, products and services known. Outdoor advertising is one of the best ways to increase your brand power and reputation.

While the design and production of outdoor advertisements are tax-deductible, space rents are also among the tax-deductible expenses. In this way, billboard advertisements, vehicle wraps, and any outdoor advertisement you can think of, become more affordable by deducting the expenses from taxes.

7. Promotional free samples

Promotional products are the most effective way to make your brand memorable. Everyone who uses your promotional products will remember your brand and increase your sales if they need your services.

Promotional free samples may be tax deductible as a business expense in the UK. This means that companies can claim a tax deduction on the cost of providing free samples to potential customers as a marketing expense. This can help to reduce the overall tax liability of the company and provide a financial incentive for businesses to offer free samples to their customers. It is important for businesses to keep detailed records of their promotional expenses, including the cost of providing free samples, in order to claim the tax deduction.

Conclusion

Like any other business costs, accountancy practices keep record of their clients' advertising costs and file their accounts without being overdue with the assistance of deadline tracking software like DMD software. If you are working with an accountant, make sure you send all your advertising costs to your accountant so that they can deduct these costs from your taxes.