A colleague and I have a difference of opinion. I believe our department should be abbreviated as "L&D." She believes it should be "L & D," which just looks silly to me. I never see spaces used before and after an ampersand when the term is an abbreviation (two distinct words, yes, but an abbreviation, no), but I haven't been able to find a rule pertaining to this particular issue. Is there one?
In the case of "acronyms" such as R&D the spaces would normally be omitted, but where the surrounding elements are words (for example, Tate & Lyle), spaces are invariably present.
Here's a link to Marks and Spencer's small print, where they refer to themselves as both M&S and Marks & Spencer on the same web page.
Just to clarify a point arising in comments elsewhere, in the title of a guide to HTML & XHTML the spaces are expected - although both surrounding elements are acronyms in themselves, they do not form a new single acronym when conjoined with an ampersand.
Also note that although at least some style guides (incl. Chicago Manual of Style) explicitly rule against spaces in acronyms, as @nohat points out, they are only style guides - there is no absolute rule in play unless your commissioning editor requires adherence to such. For example, in the UK, hospital Accident and Emergency departments are invariably A & E (with spaces).
No spaces is most often used, and supported by style guides, except in special cases. For those who have access to CMOS online, here's a link to the section advocating this:
10.10: No space is left on either side of an ampersand used within an initialism. R&D. Texas A&M.
Yes, "acronyms"/initialisms have no space. When the ampersand is used inline the spaces are present.
Bear in mind, the ampersand is a highly stylised rendering of the Latin "et" which means "and" (perhaps a scribal shortening). I have no doubt that once it was pronounced "et" rather than current "and". So inline it is a word, in acronyms, a symbol.
I share the same opinion with you Jennifer and the answers before me but I have another point which has nothing to do with English rules.
Logically, we use abbreviations or initials to minimize writing more letters. So, what is the point of adding new spaces before and after an ampersand? However, in case of full words we normally add spaces because the purpose of clarifying.
My argument is purely based on logic so I didn't take the effort to support it.