Claiming food and drink expenses: what you need to know

If you're self-employed, there is a range of expenses you can deduct from your income, reducing the amount you have to pay tax on. The deductions are primarily related to your business activities, but it's possible to claim expenses that aren't directly linked to sales made or services provided. This article will cover what those three broad categories that you can claim for.

1.      Subsistence

According to HMRC, subsistence does not include the food and drink that you consume on a daily basis while working. This can be understood by looking at HMRC's 'dual purpose' rule. This rule states that if something is necessary for reasons that are not work-related, it cannot be claimed as an expense, even if it also benefits you in a business sense. In other words, if something is not strictly work-related, it is not considered an allowable expense.

The costs of what we eat and drink in our normal day-to-day working lives cannot be classified as 'wholly and exclusively' for business, as we require these sustenance to survive. We derive personal benefit from this consumption as well.

You can deduct the cost of meals and beverages you purchase while on business travel according to HMRC's subsistence regulations. The reason for this is that it labels this type of spending as being "wholly and entirely for business reasons."

HMRC is content with the fact that even though you "need food and drink to exist," you're only purchasing that specific meal at that specific location because you're on a business trip. It adds to your daily living expenses and frequently costs more than you would typically pay. Therefore, it can be claimed as a cost.

Even while traveling for work, there are restrictions on what you can write off. HMRC won't consider it acceptable if you choose to treat yourself three times a week while traveling for business. You must be able to justify any reasonable food and beverage costs you make when traveling for business.

Understanding the distinction between a "regular place of work" and a "temporary place of work" according to HMRC is crucial. This is due to the fact that any food or beverages you purchase on the way to or while working at your regular place of employment cannot be written off as a business cost. You can claim food and beverages you purchase while traveling to or working at a temporary location (within reason).

2.      Entertainment

Contrary to what is frequently depicted in movies and on television, you cannot deduct the cost of entertaining clients in the sense of "wining and dining" In other words, you cannot pay for a meal for a client or business associate and deduct the cost from your business expenses.

In this sense, the expense of this food and drink is not deducted from income. This is where things get a bit confusing, though, because you can deduct the cost of holding a "marketing event" for your company as a business expense. There are other requirements to meet, however, this might include food and drink and still be acceptable.

Therefore, as a sole trader, you cannot deduct the cost of entertaining potential clients. Even if it's to try and gain their company, going out to dinner with a potential customer is not a permissible expense.

3.      Marketing

Events that promote your business are yet another category of permitted food and drinks expenses. If you were to plan a marketing event, you would also need to be able to demonstrate that it was created with the sole intent of bringing in new clients. It's also crucial to remember that the event should include more than just food and drinks; otherwise, it would too closely resemble an entertainment activity.