Subsistence (food & drink)

Conditions

1. For a sole trader the starting point is a refusal. HMRC states that 'The cost of food or drink consumed for the human requirement of sustenance is not allowable', that 'It does not matter that work occasions a greater appetite or causes greater expense', and that 'There is no mechanism to allow an apportionment to give a 'business' proportion or the 'extra cost' imposed by the business. The whole cost is disallowed' (BIM37660). The statutory test behind that is the 'wholly and exclusively' rule in section 34 ITTOIA 2005.
2. The sole trader's exception is a separate statutory provision, section 57A ITTOIA 2005, in the Act's Chapter 5, 'Trade profits: rules allowing deductions'. It allows a deduction for any reasonable expenses incurred on food or drink for consumption by the trader at a place to which the trader travels in the course of carrying on the trade, or while travelling to such a place, if conditions A and B are both met. Condition A: a deduction is allowed for the trader's expenses of travelling to the place, or would be allowed for them if the trader incurred them. Condition B: at the time the food or drink is bought, the trade is by its nature itinerant; or the trader does not travel to the place more than occasionally in the course of carrying on the trade and either the travel is undertaken otherwise than as part of the trader's normal pattern of travel, or the trader does not have such a normal pattern of travel. HMRC's example of an itinerant business is commercial travellers (BIM37670).
3. Overnight trips are a separate rule for a sole trader, under their own heading in HMRC's guidance: 'Where a business trip necessitates one or more nights away from home, the hotel accommodation and reasonable costs of overnight subsistence are deductible', and 'The reasonable costs of meals taken in conjunction with overnight accommodation are allowable, whether or not paid on the same bill' (BIM37670). It 'does not extend to overnight accommodation and subsistence at the base of business operations, even if there is a contractual requirement for the trader to reside in a particular place' (BIM37670).
4. For a sole trader, HMRC stresses that 'it is only 'reasonable' expenses which may be allowed and the expenses claimed must be supported by adequate contemporaneous records' (BIM37670). There is no flat-rate meal allowance for the self-employed: HMRC's simplified expenses rules cover three categories only, motor vehicles, use of home for business purposes and private use of business premises (BIM75001), so a trader claims actual costs.
5. For a limited company, section 57A is not a route: HMRC states that its guidance on that section 'applies for Income Tax only' (BIM47705). The company's test is section 54(1)(a) CTA 2009: to qualify for a deduction, 'the trade purpose of the expense must be the sole purpose' (BIM37600). Where a cost linked to a director's personal interests is taxable on the director as part of their remuneration package, HMRC says to 'allow the deduction as part of the costs of employing the director' (BIM47107). Whether what the company pays is tax-free for the director or employee who eats the meal is a separate question, under the employment income rules below.
6. For an employee or a director, meals bought while travelling for work have no rule of their own: they ride on the travel rules. HMRC's guidance on sections 337 to 339 ITEPA 2003 counts as travel expenses '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' and 'the cost of the accommodation and any necessary meals where an overnight stay is needed' (EIM31815). There are two routes: 'Section 337 allows a deduction for expenses necessarily incurred in the performance of the duties and sections 338 and 339 allow a deduction for expenses attributable to the employee's necessary attendance at a place in the performance of the duties except where they are expenses of ordinary commuting or private travel' (EIM31815). So the meal follows the journey. Whether a journey qualifies is a separate test with its own conditions, which this page does not set out; if you are an employee or director, or work through your own company, an agency or an umbrella company, that is worth having an accountant check. Other employee rules sit outside the travel rules too, and this page does not set them out. Two that often apply to meals are these. Free or subsidised meals that an employer provides in a canteen or on the employer's business premises can be exempt under section 317 ITEPA 2003, if four conditions (A to D) are met, the first being that 'the meals are provided on a reasonable scale'; see the staff refreshments page. And where the duties of an employment are performed wholly outside the United Kingdom and the employee is UK resident, section 376 ITEPA 2003 allows a deduction, on its own further conditions, where the earnings include the provision or reimbursement of accommodation or subsistence outside the United Kingdom to enable the employee to perform the duties. If either could apply to you, it is worth having an accountant check.
7. On the employee side only the extra cost of the journey counts: 'A deduction is only allowed for subsistence costs which are attributable to the business travel i.e. costs incurred in the course of the journey which are additional to any costs that the employee would ordinarily incur if they were not travelling on business' (EIM31815). Once an allowable cost is established, though, 'you do not need to take into account the costs saved as a result of the business travel' (EIM31815).
8. 'Reasonable' is the sole trader's test, not the employee's. For employees HMRC states that 'The tests that apply to travel expenses relate to the nature of the expense and not to the amount', and that 'you should not refuse a deduction for the actually incurred cost of a journey, hotel room or meal simply because a less expensive alternative is available'; only where 'the travel arrangements are unusually lavish' does HMRC consider whether the expenditure is genuinely attributable to business travel or is some sort of reward (EIM31835).
9. An employer can pay an employee's subsistence free of income tax in three main ways, and they have different conditions. Actual costs: an amount paid or reimbursed is exempt where an amount equal to or exceeding it would be allowed as a deduction from the employee's earnings under the Part 5 rules (section 289A(1) ITEPA 2003). HMRC's benchmark scale rates: an amount paid or reimbursed for expenses in the course of qualifying travel, calculated in accordance with HMRC's regulations, where the employer operates a system for checking that the employee undertook the qualifying travel and neither the employer nor anyone else operating that system knows or suspects, or could reasonably be expected to know or suspect, that the travel was not undertaken (section 289A(2A) and (4A)). A bespoke rate: an amount calculated in accordance with an approval given under section 289B (section 289A(2) and (6)(b)), for which the employer applies to HMRC showing that the rate is 'a reasonable estimate of the amount of expenses actually incurred by employees' (EIM30250). On this route conditions A and B in section 289A(3) and (4) apply: a system for checking that employees are in fact incurring and paying the expenses and that a deduction would be allowed for them, and no knowledge or suspicion that they are not (HMRC: 'For bespoke scale rate agreements a checking system is still required', EIM30270). None of the three applies where the payment is provided under relevant salary sacrifice arrangements (section 289A).
10. The benchmark scale rates are set against a minimum journey time, and HMRC states that they 'must only be used where all the qualifying conditions are met': the travel is in the performance of the duties or to a temporary place of work on a journey that is not substantially ordinary commuting; the employee is absent from their normal place of work or home for a continuous period in excess of five or ten hours; and the employee has incurred a cost on a meal after starting the journey and retained appropriate evidence of it (EIM30240). They are 'the maximum tax and NICs free amounts that can be paid by employers who choose to use the system', and a higher payment made 'without agreeing a bespoke scale rate with HMRC' means 'the excess should be subject to tax and NICs' (EIM30240). HMRC adds that 'An employee can only be reimbursed for a meal once', and that 'The published scale rates do not apply to employees covered by Working Rule Agreements, for which separate specific rates are already set for particular occupations' (EIM30240). The rates themselves, and how they combine, are on the business travel meals page.
11. HMRC distinguishes two cases. If an employer pays less than the published rates, 'employees cannot claim tax relief on the difference'. But an employee who spends more than they are reimbursed can still claim a deduction for the difference between what they actually spent and the amount reimbursed, 'subject to their having retained appropriate evidence' (EIM30240).

Common mistakes

• A sole trader claiming everyday lunches near their normal base. HMRC states that 'It does not matter that work occasions a greater appetite or causes greater expense' (BIM37660); the section 57A exception needs both conditions A and B.
• A sole trader claiming only the 'extra' cost of eating out compared with eating at home. HMRC states there is no mechanism to allow an apportionment to give the 'extra cost' imposed by the business (BIM37660): the meal either falls within an exception or is disallowed in full.
• A sole trader claiming meals on regular trips to the same place. Unless the trade is itinerant, Condition B of section 57A needs the trader not to travel to the place more than occasionally, and the travel to be outside their normal pattern of travel or for them to have no such pattern.
• Applying the sole trader's 'reasonable' test to an employee. For employees the tests 'relate to the nature of the expense and not to the amount' (EIM31835).
• Assuming a sole trader can use HMRC's benchmark scale rates. They are amounts an employer pays or reimburses to an employee (EIM30240); a sole trader claims actual costs (BIM75001).

What to keep

• For a sole trader: receipts, and a record made at the time of the journey each meal relates to. HMRC states that 'the expenses claimed must be supported by adequate contemporaneous records' (BIM37670).
• For a sole trader relying on section 57A: a note of how the journey meets Condition A (the cost of travelling to the place is itself deductible) and Condition B (the trade is itinerant, or the trip is occasional and outside your normal pattern of travel).
• For a benchmark scale rate payment: HMRC's qualifying conditions include that the employee has incurred a cost on a meal after starting the journey and 'retained appropriate evidence of their expenditure' (EIM30240).

Real-world example

A sole trader graphic designer who works from home takes the train to a one-off meeting with a new client in Leeds and buys lunch at the station. If the train fare is itself a deductible travel cost, Condition A of section 57A is met; a single trip to a place she does not otherwise travel to, outside her normal pattern of travel, meets Condition B. With both conditions met, the reasonable cost of the lunch is deductible. If the client later books her to work at their Leeds office every Tuesday, she now travels there more than occasionally and as part of her normal pattern, Condition B is no longer met, and the Tuesday lunches are not deductible. The lunch she would have eaten at home on any other day was never deductible (BIM37660).

Frequently asked