George is a self-employed golf pro who has been making a name for himself in the sport. He is also employed by a local golf club. He submits an annual self assessment tax return to disclose his sole trade and PAYE earnings to HMRC.

He has been offered a sponsored deal by a local car dealership who will provide the car free of charge in return for George driving it to events where he is well known. George will pay for fuel, insurance and other running costs but the dealership will cover tax, maintenance and repairs.

The dealership still owns the car and at the end of the sponsorship period, the car must be given back to the dealership.

George asks if there will be any personal tax liability on the car.

If George were being provided with the car by the golf club – his employer – he would be receiving a taxable benefit in kind for the personal use of the car but that does not appear to be the case here. The dealership is providing the car to George the self-employed professional athlete. Since George is self-employed, the rules relating to employer provided benefits in kind do not apply.

If George were to provide services in return for the use of the car – say George was asked to run a golf training day or provide services for a team building events for the dealership staff in return for the use of the car – then this would be a barter transaction.  There would be taxable trading income to set off against a taxable value received. The taxable value would be calculated in accordance with the car benefit rules.

If George provided a commercial service and the dealership paid a commercial rate – then the sale transaction to the dealership should not compromise the sponsorship transaction with George.

If George does nothing in return for the vehicle other than drive it to events where the dealership would stand to benefit from the car being present, then there is likely to be no taxable value to include in his self-employment return.

If George decides that he wants to go ahead with the offer from the dealership – our advice to George would be to have an accountant review the contract he has with his sponsor to make sure he is fully protected.

We can help with that!

 

 

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