Many self-employed, contractors and business owners know about subsistence – the name for what you can claim when eating and drinking at the company’s expense, but do you really know what you can legitimately claim?

Here’s a quick and easy guide to when it’s a free lunch, and when you have to pick up the tab yourself.

Subsistence rules for limited companies

The key to knowing whether or not you can claim your lunch is about where you are travelling to and from.

Your “permanent place of work” is defined by HMRC as somewhere you spend 40% or more of your working time over two years. This could be your home office, hot-desking location, or rented office. You can also have more than one, for example, if you split your time between working at home and working in an office.

If you are travelling from your home to your permanent place of work or between a couple of different places of work you cannot claim your lunch or other refreshments.

But if you’re on your way to a meeting or to a temporary place of work – a client’s office for example – then you can claim back your lunch as an expense.

Subsistence rules for sole traders

Things are slightly different for sole traders. If your business relies on travel, for example, if you are an independent hotel inspector or a construction worker who  works on a different site every week then all of your meal and refreshment expenses incurred when at work can be claimed.

Otherwise, you can only claim food and drink as an expense if you are:

  –  Staying away from home overnight for business

  –  Making a one-off trip outside of your usual working pattern

So if you are a plumber who is always working at different customers’ houses your lunch isn’t a valid expense as that is your normal working pattern. But if you are a hotel inspector and have to travel the country to get to the places you need to review, all of your food and drink on those trips are allowed as subsistence claims.

Whether you’re a sole trader or operate a limited company, you cannot claim for your lunch if you are working regularly at a client’s office or if you have just nipped out to the sandwich shop when working at home if that’s where you are usually based.

If you have any queries about what you can legitimately claim and what wouldn’t be allowed by HMRC, do give Claire or James a call to chat it through.