Claiming food expenses if you’re self-employed is a handy way to reduce your tax bill. However, the HMRC rules around what food and drink you can and can’t claim is complicated for many people. Why? Because it’s so difficult for HMRC to know whether you are out eating and drinking for personal reasons or business. Therefore, they err on the side of caution.
In this guide, you’ll find out what food and drink you can claim if you’re registered as self-employed. In addition, I’ve included examples to help you understand exactly how the rules work.
This guide is for self-employed business owners, different rules apply if you have a Limited Company.
Table of contents
- 1. What Food Can You Claim When You’re Self-Employed?
- 2. Examples of Claiming Self Employed Food & Drink Expenses
- 3. How Much Can You Claim for as Subsistence?
- 4. Claiming for Alcohol as a Business Expense
- 5. Can You Claim a Fixed Meal Allowance If You’re Self Employed?
- 6. Is Client Entertainment a Tax Deductible for the Self-Employed?
- 7. How to Claim for Food On Your Tax Return
Updated 4 August 2021
1. What Food Can You Claim When You’re Self-Employed?
- The cost of food and drink that you buy when travelling outside of your normal work pattern or daily commute is an allowable business expense;
- Your expenses for food and drink that you buy for personal reasons are not an allowable business expense. That includes times when you choose to eat away from your base of work;
- The costs of food and drink where an overnight stay is required, is an allowable expense. This is in addition to the cost of accommodation.
- Food, drink and accommodation where a trader is required to reside at the base of operation is not an allowable expense.
- Where your job is ‘itinerant by nature’. This involves visiting clients at different locations on a regular basis so then costs are not an allowable expense.
2. Examples of Claiming Self Employed Food & Drink Expenses
- A self-employed bookkeeper normally works from an office he rents. He travels to see a potential new client and buys lunch while on the road.
The bookkeeper can claim for food and drink as an allowable business expense. This is because the journey is outside of his normal commute.
- An self-employed web developer agrees to work two days at a clients office on a weekly basis.
Any subsistence costs are a disallowable business expense because this is now a regular trip.
- A self-employed hairdresser stays overnight in a hotel to assist with a clients wedding.
The costs of food and the accommodation are an allowable business expense.
- A self-employed long-distance lorry driver spends the night in their cab rather than take overnight accommodation.
The driver can claim for food and drink as an allowable business expense.
- A sole trader normally works at home but decides to work from a coffee shop for the day, buying food and drinks during the day as she works.
The cost is not an allowable business expense because everyone must eat to live and these costs are not necessary for the purpose of trade.
- A self-employed gardener has a number of clients and visits their sites.
As the job is itinerant by nature the costs are an allowable business expense.
3. How Much Can You Claim for as Subsistence?
Any claim for allowable food or drink as a business expense must be “reasonable”. Unfortunately, HMRC does not offer us a clear definition of “reasonable”. But the safest approach is to assume that what you buy should be on the more sensible side.
A meal deal from Pret would be acceptable. However, a night out with cocktails and lobster may go down well with HMRC. As with all other business expenses you wish to claim, you need to keep receipts to back up what you put on your self-assessment tax return.
4. Claiming for Alcohol as a Business Expense
We all like a glass of wine after a busy day. The same rules for determining whether subsistence is an allowable business expense applies. But any alcohol must be bought with your meal for it to be included as an allowable expense. Again it must be reasonable. So, this means a glass of wine or a beer with your meal rather than a whole evening in the hotel bar.
5. Can You Claim a Fixed Meal Allowance If You’re Self Employed?
There is no fixed meal allowance set by HMRC for food or drink that you can claim on your tax return as a flat rate if you are self-employed or a sole trader. You’ll need to claim the actual costs of your meals and keep supporting receipts.
6. Is Client Entertainment a Tax Deductible for the Self-Employed?
Client entertainment is not a tax deductible expense if you’re a sole trader (or even if you formed a Limited Company). Unfortunately, after many years of business owners abusing their deductions and putting through personal entertainment costs as a business expense, HMRC has taken the approach to make all client entertainment a disallowable expense. In addition, you cannot reclaim any VAT if you were registered for VAT.
So, even if you are entertaining your clients for business reasons you won’t get tax relief. However, if you have a separate business bank account (which it is recommended you do by HMRC), you can pay for the cost of your client entertainment from this account to save you from using your personal money.
7. How to Claim for Food On Your Tax Return
You’ll need to claim the cost of allowable food in the self-employment section of your tax return. If your business turnover is less than £85,000 for 2021/2022, you’ll have the option to fill in the simplified version of this part of the tax return. Therefore, you only need to enter your total expenses. You’ll need to include your food and drink claim in the figure you enter alongside your other allowable business expenses.
If your business turnover is more than £85,000, you’ll need to enter a breakdown of your expenses in the boxes set out by HMRC. You also need to include your business food in within ‘car, van and travel expenses‘
Whatever your business turnover, you should keep a note of what you are claiming for and how you worked it out as part of your business records. This is in case of an HMRC investigation and they ask for evidence of what you are claiming for to check you’ve paid the right amount of self-employed tax.
When it comes to claiming expenses, always use your judgement when it comes to deciding what you deduct against your taxes. Incorrect claims can result in penalties. And, as always, if you aren’t sure, seeks the advice of a professional.