Some Basic rules on Travel and Subsistence expenses for the self-employed
You can only claim as business expenses those costs which you have incurred ‘wholly and exclusively’ in the running of your business. This means that they will be allowed as a deduction against your profits before your tax liability is calculated – hence being ‘tax deductible’. Subsistence is the fancy term that the taxman and accountants use to describe food and drink.
Where are you working?
When you have a fixed and usual place of work, the cost of the lunch that you eat in that workplace is not regarded as a business expense - after all, we all have to eat. The cost of travelling to and from that workplace is not tax deductible either, as a general rule.
Always on the move?
If you have no fixed work place - for example you work at the offices of different clients every day or every week and don’t spend more than 40% of your time at any one location, then your travel to and from those clients is tax deductible but your lunch is not – again – we all have to eat!
UK business trips
If you travel for work in the UK and have to stay away overnight, then hotel accommodation and reasonable costs of overnight subsistence are deductible. The cost of your lunches whilst you are actually travelling are allowable but if you’re away for say a week, you cannot claim your lunch everyday as an expense because…. we all have to eat.
Overseas business trips
If you travel overseas on business, then you are allowed to claim the cost of all your meals and drinks as well as the hotel accommodation.
Entertaining
The cost of entertaining clients is never tax deductible and if you are VAT registered you are not allowed to claim the VAT on such expenses either. Your business can foot the bill for the lunch and you can treat it as a business expense in your accounts, but it must be added back on to your profits before calculating your tax liability at the end of the year. And I’m afraid you can’t claim the portion of the bill that related to your lunch!
If you would like further advice on this aspect of your business expenses or any other, please get in touch by calling me on 0794 167 4936 or email me at mary@mtmarsh.co.uk.
