Can someone please clarify rules around subsistence - meal allowance

[Cappy]

Hi everyone, I was wondering if someone could clarify subsistence - meal allowance rules to me? I thought that it was an allowable expense but it looks like I was wrong. I'm outside of IR35, have Ltd. and am currently mainly working at the client's site (thus my query around reclaiming lunch costs).

Specifically, because I'm not certain what my accountant has meant in her response to me:

"Unfortunately, lunch is not something we recommend you claim through your company because of the following reasons:
1) Lunch costs are not wholly, exclusively and necessary to the running of your business
2) you would to provide yourself lunch, whether you were working or not
3) When you are working as an employee in any other company (as in your own Ltd.), they do not usually pay for your lunch. Therefore, your limited company should not either.

You are able to pay for lunches personally, but just not through the company."


Many thanks.

[northernladuk]

Maybe they are just playing super tight. You only get 20% of it back so maybe they don't think it's worth a quid a day.

Contractor specialists or a normal accountant?

[Cappy]

SJD

Until recently I was always under umbrella co (lost lots of £ but had nothing new to learn either). So am just getting to grips with details of contracting under own Ltd.

The response around lunches threw me a bit.... I specifically don't understand the last sentence (or is it simply - 'buy your own food'. I thought I was gonna be able to get at least some £ back.

I think also the issue is that I don't understand YET a difference between having a cost under the Ltd (going out directly from my business bank account) and paying for something myself from my current account/cash & then charging it back to the Ltd. and which way is better/more effective. My terminology is prob. wrong here but I hope you get the sense of what I'm writing about.

You've responded to my first thread too - thanks (have to get there to thank everyone...).

[chopper]

You are able to pay for lunches personally

Top notch advice there.

I think the one caveat to the 'not through the company' is if you are staying away for work, then you can claim lunch (the same as employees can, and will). But if you are working reasonably locally to home, within commutable distance, then why would you be entitled to a (tax) free lunch?

[TheCyclingProgrammer]

All subsistence that relates to either business travel or travel to a temporary workplace IS an allowable expense.

This would normally include lunch if you're working on-site throughout the day and possibly dinner if you worked very late or stayed overnight.

The fact you would eat lunch anyway is irrelevant. You're incurring an additional cost of you buy lunch while on site or on a business trip.

The fact that permanent employees don't get lunch tax free is irrelevant as they aren't on business or travelling to a temporary workplace.

So you're accountant is wrong I'm afraid.

[stek]

Top notch advice there.

I think the one caveat to the 'not through the company' is if you are staying away for work, then you can claim lunch (the same as employees can, and will). But if you are working reasonably locally to home, within commutable distance, then why would you be entitled to a (tax) free lunch?

Because despite the silliness of it, you aren't working at your normal place of work whereas presumably at homeofficeco you have food that you would normally eat.

[TheCyclingProgrammer]

Here's the technical guidance that your accountant should probably read:

https://www.gov.uk/hmrc-internal-man...anual/eim31815

Following the decision in Nolder v Walters (15TC380) ‘travel expenses’ for this purpose include the actual costs of travel together with any subsistence expenditure and other associated costs that are incurred in making the journey. This includes:

any necessary subsistence costs incurred in the course of the journey
the cost of meals necessarily purchased whilst an employee is at a temporary workplace
the cost of the accommodation and any necessary meals where an overnight stay is needed. This will be the case even where the employee stays away for some time
The examples in EIM31816 demonstrate when business journeys begin and end.
.

To address each of their specific points:

1. Doesn't matter. If the travel is allowable, then any associated subsistence is also allowable as per the above guidance.

2. Irrelevant.

3. Irrelevant. Commuting is not business travel therefore no meals would be attributable to business travel which is why most employees don't get their lunch paid for, although employers can usually provide their permanent employees with other benefits like staff canteens tax free.

Yes it's only saving you the tax as NLUK says but if you can claim it why wouldn't you.

Is your accountant a contractor accountant? If so I would expect them to understand the rules on travel and subsistence correctly. If they aren't you might want to consider a better accountant.

[TheBA]

I recently got this advice from my accountant. Not a, you can't more a shouldn't.
"you shouldn’t really be claiming the lunch if you are travelling back and forth from your home. From HMRC’s perspective this is something which you could bring yourself from home."

[TheCyclingProgrammer]

I think also the issue is that I don't understand YET a difference between having a cost under the Ltd (going out directly from my business bank account) and paying for something myself from my current account/cash & then charging it back to the Ltd. and which way is better/more effective. My terminology is prob. wrong here but I hope you get the sense of what I'm writing about.

You've responded to my first thread too - thanks (have to get there to thank everyone...).

For the purposes of employee expenses (costs that you incur in the course of doing your job, like travel, subsistence and accommodation costs), it doesn't really matter.

When this stuff had to go on a P11D (prior to this tax year - they are now covered by exemptions) it had to be reported regardless of whether or not you paid for it on the business debit card or paid personally and reclaimed it. It also made no difference to the tax treatment.

So do whatever you find easier, personally I like to pay for my out of pocket expenses personally and put it through as an expense claim, as it helps keep my employee expenses separate from company expenses.

[TheCyclingProgrammer]

I recently got this advice from my accountant. Not a, you can't more a shouldn't.
"you shouldn’t really be claiming the lunch if you are travelling back and forth from your home. From HMRC’s perspective this is something which you could bring yourself from home."

More utter nonsense. Who are the accountants giving out this crap advice? Citation needed I think but HMRCs own guidance makes it pretty clear (see above).

The fact that you could bring lunch is irrelevant.