12th September 2019

One of the most frequently claimed business expenses our clients submit is subsistence. Whether you operate through a limited company or are a sole trader, claiming your meals while out and about is not always allowed, so let us explain.

First things first, the 24-month rule

You may already know about the 24-month rule, per which you are only allowed to claim for travel & subsistence-related expenses for temporary work locations. With the rule, HMRC set out to stop people from claiming ordinary expenses not strictly incurred on business.

Your main work location (where you spend more than 40% of your time) is only temporary until you become aware that you’ll be working at the site for more than 24 months.  Sign a long contract, and you might get caught by this right away!

So what’s allowed?

HMRC’s general rule is that only expenses incurred “wholly and exclusively” for the purposes of trading are allowed. It is, therefore, vital to look at the circumstances in which the transaction occurred.

We all need to eat, so it is difficult to determine whether that lunch was bought while out on business. HMRC says that subsistence should only be claimed when you work outside your usual working routine, so if you are confined to the same office every day, your lunches will be difficult to justify as allowable.

Once it is clear that the meal was necessary as you were on the road for that business meeting, the cost can then be put through as a business expense. The company will save 19% of the value from its corporation tax.

Things you cannot claim are…

If you prepare your lunches, you are out of luck, as HMRC has specifically listed food and groceries as taxable benefits.

Not surprisingly, you will not be able to claim alcoholic drinks.

There is also a “reasonable amount” limit to what you can claim, so visits to fancy places are out of the question (this also applies to other expenses).

So what happens when you take a client out? There is good and bad news; you can use the company card to pay for the meal or drinks, but they are not tax-deductible.

Remember the receipt

As with any other business expense, don’t forget to save the receipt (VAT one, if possible). We’ve talked about those in detail in a separate guide here.

Like always, if you have any questions or come across an expensive item you are unsure about, feel free to contact your accounts assistant here at MyAccountant.

We hope that the few points above have been helpful. If you have questions, contact us at 0800 917 9100 or send us an e-mail at info@myaccountant.co.uk. Remember to follow us on LinkedIn, Facebook and Twitter and visit the blog page of our website for guides and articles.