Can someone please clarify rules around subsistence - meal allowance

[northernladuk]

To be fair does make sense really.

[TheCyclingProgrammer]

malvolio ignoring the rules as written again, as usual.

"Wholly and exclusively" doesn't apply here. The test is "wholly, exclusively and necessarily" and it applies specifically to the travel. Subsistence is only claimable if it relates to the journey, so any meals incurred whilst on business or working at a temporary workplace are claimable.

Its all or nothing. If the travel is claimable, so is any associated subsistence (which would include lunch if working at a temporary workplace). If the travel is not claimable (normal commuting, or caught by 24 month rule for example), then neither is the subsistence.

The rules for the self employed are different and the "wholly and exclusively" test does apply and meals aren't usually claimable.

By all means feel free to continue the very clear guidance outlined on the HMRC employers manual, the SJD website and numerous other accountancy and contractor websites though.

[TheCyclingProgrammer]

To update you: I've heard back from the accountant again (SJD) - she's adamant that lunches can't be claimed when working at client's site.

They are wrong.

What do they have to say about their own very website contradicting their piss poor advice?

Get a new accountant who knows the rules.

Once again:
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

If you are working on-site and need to buy lunch, its claimable.

There's a page in the Business Information Manual that talks about food not being claimable due to there being duality of purpose but this applies to self-employed traders, not employees or directors. Beware of any accountant linking to it to back up their argument.

[Old Greg]

They are wrong.

What do they have to say about their own very website contradicting their piss poor advice?

Get a new accountant who knows the rules.

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



If you are working on-site and need to buy lunch, its claimable.

There's a page in the Business Information Manual that talks about food not being claimable due to there being duality of purpose but this applies to self-employed traders, not employees or directors. Beware of any accountant linking to it to back up their argument.

When I was contracting in the UK, I has SJD as my accountant and had similar advice. I think you are correct, TCP, but I chose not to claim meals anyway. Perhaps it is about my attitude to risk, and maybe it is irrational as well. But my view was that I was already maximising take home with: minimum wage + divis; income splitting with spouse; travel (including occasionally hotels and evening meals if staying away overnight). Beyond that the only claims I would make were for accountancy, laptop / printer etc., the odd bit of training, annual party.

So I missed out on some opportunities to claim more. I would also say that I couldn't really be bothered with a load of 5 quid receipts. So the advice to get a new accountant is fine if you really want to maximise every drop of take home, but you could always tell SJD you're ignoring their advice, I guess.

[TheCyclingProgrammer]

When I was contracting in the UK, I has SJD as my accountant and had similar advice. I think you are correct, TCP, but I chose not to claim meals anyway. Perhaps it is about my attitude to risk, and maybe it is irrational as well. But my view was that I was already maximising take home with: minimum wage + divis; income splitting with spouse; travel (including occasionally hotels and evening meals if staying away overnight). Beyond that the only claims I would make were for accountancy, laptop / printer etc., the odd bit of training, annual party.

So I missed out on some opportunities to claim more. I would also say that I couldn't really be bothered with a load of 5 quid receipts. So the advice to get a new accountant is fine if you really want to maximise every drop of take home, but you could always tell SJD you're ignoring their advice, I guess.

Perhaps it was a bit harsh; IMO there is no grey area with this so not sure that risk really comes into it, but if somebody wants to not claim lunch by choice that's up to them. But to outright say you can't is bad advice IMO when all HMRC guidance contradicts that.

Personally I fail to see how its OK on one hand to claim business travel expenses but not the related subsistence. They inherently go hand in hand. Both are allowed, so why draw the line at only claiming travel? If its not costing you much and you can't be bothered to collect all the receipts - fair enough. If your subsistence costs are significant enough to claim, then its not too much effort to capture receipts with an app. I always claim my lunch, I don't generally bother claiming any other subsistence related to my journeys (coffees, a snack on the way into work if I've not managed to get breakfast etc.) so I guess there is an element of personal choice there.

Anyway, OP should now have all the information they need to make their own decision - their accountants (poor) advice, the contradictory advice on their accountants website, the information on the HMRC website and I'm sure if they google it they'll find many other accountants and contractor websites backing up what I've already said. Its up to them.

[malvolio]

Perhaps it was a bit harsh; IMO there is no grey area with this so not sure that risk really comes into it, but if somebody wants to not claim lunch by choice that's up to them. But to outright say you can't is bad advice IMO when all HMRC guidance contradicts that.

Personally I fail to see how its OK on one hand to claim business travel expenses but not the related subsistence. They inherently go hand in hand. Both are allowed, so why draw the line at only claiming travel? If its not costing you much and you can't be bothered to collect all the receipts - fair enough. If your subsistence costs are significant enough to claim, then its not too much effort to capture receipts with an app. I always claim my lunch, I don't generally bother claiming any other subsistence related to my journeys (coffees, a snack on the way into work if I've not managed to get breakfast etc.) so I guess there is an element of personal choice there.

Anyway, OP should now have all the information they need to make their own decision - their accountants (poor) advice, the contradictory advice on their accountants website, the information on the HMRC website and I'm sure if they google it they'll find many other accountants and contractor websites backing up what I've already said. Its up to them.

Just because you can (abou which I am profoundly sceptical but hey...) doesn't mean that you should, for the various reasons already given.

And accountants' advice is precisely that; advice, aimed to minimise your exposure to HMRC's predations balanced with ensuring the best legal return on your income. The costs of defending your personal expenses policy will probably outweight the tiny savings you are making shoud oit come to that, but since it is advice, it's up to you as a Director of YourCo to follow or ignore it as you see fit. YMMV.

However I stand by my assertion that claiming every little thing may be satisfying but it is ultimately why we are having constantly to defend ourselves against ever more draconian limitations on how we work.

Incidetnally, if you're IR35 caught, or use a brolly, then expenses are dead and gone anyway, including discounted lunches.

[Old Greg]

Just because you can (abou which I am profoundly sceptical but hey...) doesn't mean that you should, for the various reasons already given.

And accountants' advice is precisely that; advice, aimed to minimise your exposure to HMRC's predations balanced with ensuring the best legal return on your income. The costs of defending your personal expenses policy will probably outweight the tiny savings you are making shoud oit come to that, but since it is advice, it's up to you as a Director of YourCo to follow or ignore it as you see fit. YMMV.

However I stand by my assertion that claiming every little thing may be satisfying but it is ultimately why we are having constantly to defend ourselves against ever more draconian limitations on how we work.

Incidetnally, if you're IR35 caught, or use a brolly, then expenses are dead and gone anyway, including discounted lunches.

And I would say that I didn't want anyone from HMRC to start sniffing around my lunches and then find juicer meals in my IR35 status. Again, perhaps that is irrationally risk averse.

[ContrataxLtd]

Just because you can (abou which I am profoundly sceptical but hey...) doesn't mean that you should, for the various reasons already given.

And accountants' advice is precisely that; advice, aimed to minimise your exposure to HMRC's predations balanced with ensuring the best legal return on your income. The costs of defending your personal expenses policy will probably outweight the tiny savings you are making shoud oit come to that, but since it is advice, it's up to you as a Director of YourCo to follow or ignore it as you see fit. YMMV.

However I stand by my assertion that claiming every little thing may be satisfying but it is ultimately why we are having constantly to defend ourselves against ever more draconian limitations on how we work.

Incidetnally, if you're IR35 caught, or use a brolly, then expenses are dead and gone anyway, including discounted lunches.

But surely the accountants advice shouldn't be that you can't claim it (because you can) but explain any potential risks in claiming and let the client make an informed decision? I personally think the risk is actually quite low myself.

For most the saving might not be that great I admit and a lot of people probably won't both but say you were a high rate tax payer spending £5 per day on lunch (a sandwich & drink for example) then you could save about £700 per year in CT & personal tax just by claiming the lunches - almost a years accountancy fees saving right there (and you do always advise that a good accountant will save you more than they cost!).

If you really wanted to save money though you'd probably just take a packed lunch each day and be done with it.

Martin
Contratax Ltd

[malvolio]

But surely the accountants advice shouldn't be that you can't claim it (because you can) but explain any potential risks in claiming and let the client make an informed decision? I personally think the risk is actually quite low myself.

For most the saving might not be that great I admit and a lot of people probably won't both but say you were a high rate tax payer spending £5 per day on lunch (a sandwich & drink for example) then you could save about £700 per year in CT & personal tax just by claiming the lunches - almost a years accountancy fees saving right there (and you do always advise that a good accountant will save you more than they cost!).

If you really wanted to save money though you'd probably just take a packed lunch each day and be done with it.

Martin
Contratax Ltd

Yes the risk is low. And FWIW I've never claimed lunch anyway, on the not unreasonable grounds that I would have it anyway, working or not, so perhaps I'm a little biased.

But the fuzzy bit is "commuting". If you go to the same, admittedly temporary workplace every day for a year or two and go home every night , is that not commuting, as opposed to necessary business travel? HMRC may well take that view...

[ContrataxLtd]

Yes the risk is low. And FWIW I've never claimed lunch anyway, on the not unreasonable grounds that I would have it anyway, working or not, so perhaps I'm a little biased.

But the fuzzy bit is "commuting". If you go to the same, admittedly temporary workplace every day for a year or two and go home every night , is that not commuting, as opposed to necessary business travel? HMRC may well take that view...

Based on your argument in the second paragraph would I be right in thinking you don't claim any of your travel either in that situation on the basis that HMRC might take that view? It's obviously an area that HMRC don't like but if the workplace is temporary under current legislation that the travel and associated costs are allowable and I don't think HMRC have any basis for arguing otherwise.

Just for clarity too, the 'year or two' comment may confuse some, going to the same site for 2 years would mean you fall foul of the 24 month rule (unless the less than 40% override applies).

Martin
Contratax Ltd