We all need to eat to survive as human beings. However, when are business meals and entertainment allowed as a business expense? Furthermore, in which instances is one able to claim for food whilst working and when are business meals tax deductible?
Let’s look here at a contractor or small business owner who is eating on his or her own. Under this scenario, it will not include with colleagues as this is a completely separate issue.
We will also not delve here into business meals that you consume as part of entertainment costs, such as with clients or suppliers. This is because meal and entertainment expenses and other entertainment activity are covered elsewhere on this website.
As a general rule, when we think about are business meals tax deductible, any meals that you claim for will need to be for business purposes, as with all other business expenses. Therefore, the meals and lunches will need to pass the test for wholly and exclusively for the purposes of the business.
When meals are tax-deductible:
- A limited company owner will claim for these through their company expenses.
- Someone who is a sole trader or self-employed will claim for the meals through their personal tax return.
Daily work meals
If you are a contractor or consultant and travel to the same work site each day, you may wonder if your meals are tax deductible. This will include meals, beverages and refreshments. The answer is, as they are part of your daily work routine, your daily meals are generally not an allowable expense.
When are business meals tax deductible?
When we take a look into are business meals tax deductible, there are two areas where you can claim expenses for business meals. These will be a 100% deduction against tax and they are shown in the next two examples.
Example 1 -locations that are not part of your `usual’ work routine
If you work at a remote site or one that is not part of your `usual work routine’. Providing that you are on legitimate business, you are allowed to claim for a meal allowance or the actual meal costs.
Example 2 -staying away from home overnight
When you work way from home overnight you will incur accommodation expenses, including meals. In this instance, you can also claim for your business meals or a meal allowance when you are staying away from home overnight for work reasons. This includes when you are working abroad, if you have an overseas assignment.
Eligible to claim for your business meals and lunches
To clarify on the above, when you run your own business, you can only claim for business meals:
a) if you travel to sites that you do not otherwise travel to under your `usual’ work routine; or
b) if you stay away from home overnight.
In brief, if you can claim the cost of your food and drink, these expenses will be a business tax deduction. Therefore, you can include these as part of your business travel expenses in:
- Your company expenses if you run your own limited company.
- On your tax return, if you are self-employed / a sole trader.
HM Revenue & Customs’ (HMRC) guidelines:
As a self-employed person (by this we would take it to include someone who is a sole trader but also contractors who are directors of their own company), you can claim for “reasonable” costs of food and drink when you are travelling on business, if:
- Your business is by its nature, itinerant. For example, you are a commercial traveller.
- You are making an “occasional business journey outside the normal pattern.” For example, you’re a home-based illustrator, and you travel to Manchester to meet a new publisher.
- As part of your work, you stay overnight on a business trip and claim the cost of accommodation as well as meals. Note, you can also claim for Personal Incidental Expenses (PIEs) when you are staying away from home overnight for work reasons. When you claim for these costs, they are also subject to the 24 month rule which means that you must not be contracted to be based at your current worksite for longer than 24 months.
- HMRC has extended this to “traders who do not use hotels.” Specifically, long-distance lorry drivers who sleep in their cabs can also claim the cost of their meals, even though they do not claim for the cost of accommodation.
HMRC standard meal allowances
HMRC will update the exact amounts that can be claimed as meal / subsistence allowances every year. The last update was on 7 April 2019 and the official HMRC meal allowances since this date are:
- £5 for travel of 5 hours or more
- £10 for travel of 10 hours or more
- £25 for travel of 15 hours or more, or if the travel is ongoing after 8pm.
“Reasonable” costs? What are these?
In the case of food and drink for the self-employed, HMRC does not define what a “reasonable” expense is.
When looking at business meals for employees, they give an example of “having an elaborate menu and fine wines” as “meals on an unreasonable scale.”
Therefore, you are well-advised not to claim for any meals at lavish or extravagant establishments that charge an arm and a leg.
As with all business expenses, if you incur allowable business meal costs, you should obtain receipts. What’s more, you should keep these in a safe place. They are proof if the taxman ever asks to see these at a later date.
Depending upon the type of work that you do, you may also be able to claim for your business clothing. However, there are certain rules to bear in mind with regards to what you can claim.
Finally, please remember you are able to make a claim for meals or meal allowance when:
- You are travelling to site outside your `regular work pattern’; or
- You are staying away from home overnight for business reasons.
Link to Contractor Advice UK group on