Claiming back the money you spend on food is allowed if you’re self-employed – but you can’t just claim everything you eat. So, what’s the deal with claiming lunch as a business expense?
Read on, or if you’d rather download a guide to read later, check out the jargon-free PDF Business Expenses guide below.
HMRC’s rules on claiming lunch expenses
Being self-employed gives you the ability to claim back any business expenses you incur. If you work through your own limited company, this reduces the amount of tax your company pays.
Since 1st April 2017, the Corporation Tax rate in the UK is 19% so the savings could be useful. You can include every single business expense that qualifies in your annual accounts, reducing the amount your company pays tax on and saving your company some precious pennies.
If you work as a sole trader rather than through a limited company, then the situation is similar. Any allowable expenses will reduce your sole trader profits, meaning you’ll pay less income tax and National Insurance when you complete your Self Assessment.
HMRC’s general rule when it comes to expenses is that you can only claim back expenses that are “wholly and exclusively” for the purposes of trade. That’s why food and drink expenses can be a tricky one to apply to those rules, since everyone needs food and drink to survive.
There are certain situations where you can claim for food and drink expenses. The rule is that you’re allowed to claim a meal as subsistence – but it has to be outside of your normal working routine. So, if you’re travelling to and from the same workplace every day, it’s unlikely that this will be classed as an allowable expense.
To make things even trickier, there are also different rules depending on whether you operate as a sole trader or limited company.
What makes a workplace ‘temporary’?
HMRC’s rules about whether a workplace is permanent or temporary (and whether expenses can be claimed) are complex. HMRC says that if a period of continuous work lasts more than 24 months at a workplace (i.e. client site), that workplace isn’t temporary and you can’t claim expenses, subsistence, and tax relief. A period of continuous work means 40% or more of your time.
Similarly, if attendance at a workplace follows a ‘pattern’ – for instance, you must attend the workplace on the same day each week for more than 24 months – then HMRC may decide the workplace is permanent and no expenses can be claimed.
So, if you spend more than 40% of your time at a client’s site, you can only claim expenses, subsistence and tax relief for a period of 24 months. After 24 months, or when you become aware you’ll be spending more than 24 months at a client’s site, your workplace is permanent and you can no longer claim them.
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Business Expense Guide →
Need more help with expenses?
The rules on what you can and can’t claim as business expenses are complicated and vary depending on a number of factors. Our handy business expenses guide will help you figure it out by giving you detailed instructions on exactly what you’re entitled to claim as business expenses and how to go about doing it.