When are food expenses tax deductible?
By Cheaper Accountant, May 29 2018 05:52AM
We are often asked by clients what expenses can be charged to a company and quite often this is very clear whether or not an expense is a genuine cost of business and is therefore tax deductible or not. When it comes to food expenses this distinction is not always immediately clear. This blog article has been written to inform our readers on what food expenses are tax deductible and the circumstances under which food is not a tax deductible expense.
For those who might not be clear on the accounting jargon: a tax deductible expense is any expense that leads to a reduction in taxable company profits. This in turn, reduces the amount of corporation tax due.
Entertainment of clients
A lot of business owners wrongly assume that entertaining clients through the purchasing of food is an allowable tax deduction. It is easy to see the appeal of charging such expenditure to the company.
HMRC do not accept this as tax deductible regardless of the purpose of the meeting. From the point of view of the tax man, food is not a requirement for a meeting to be held. You can simply conduct the meeting and have the same conversations without food. HMRC determine here that food is not a necessary expense.
Food for employee entertainment – Christmas party
Client entertainment is ruled out as explained above so you may naturally think that employee entertainment is also out of the question. That’s not the case!
Employee entertainment can be claimed as a tax deductible expense of up to £150 per employee. Events such as a Christmas party are considered reasonable expenses by HMRC. This could be as simple as a Christmas meal at a restaurant for all employees.
We have previously written about the tax advantages of holding a company Christmas party, where you can read more about this in more detail.
Personal or employee subsistence
You may need to purchase food when you travel for work purposes and when away from the business premises you are entitled to claim food costs in the same way as you would for transport and accommodation.
HMRC allow this type of food (or subsistence) as an allowable expense.
If you are ever in any doubt about what to claim from your company when it comes to food costs or any other business related expenditure it is always worth consulting an accountant. The accountants at Cheaper Accountant are always on hand to provide you with the advice and guidance you need.