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Guide to subsistence expenses

When it comes to tax planning, it’s important to make sure that you’re getting your business expenses right. This includes subsistence expenses – everyone spends money on food and drink, so it’s something that people often have questions on, like what does subsistence mean, exactly? We aim to explain everything you need to know about subsistence expenses in our guide here

What does subsistence mean?

Subsistence describes transactions relating to food and drink, which is how it’s interpreted by HM Revenue & Customs (HMRC). Whether buying coffee for a client or food for yourself, it all falls under subsistence expenses.

Is subsistence allowable for tax purposes?

Generally, subsistence expenses are not allowable expenses for tax purposes. For expenses to be tax deductible, they must be necessary for the businesses – subsistence expenses would usually come under normal living costs, and therefore don’t tend to be allowable for tax purposes.

However, there are a couple of conditions under which travel and subsistence expenses would be allowable. If the trade is an itinerant trade, or the trader doesn’t have to travel to the place regularly – and either the travel isn’t part of the trader’s normal pattern of travel, or the trader doesn’t have a normal pattern of travel – travel and subsistence expenses would be allowable. In other words, if an employee is working outside of their regular pattern more than occasionally, and needs food and drink that they normally wouldn't, a subsistence claim can be made.

The sort of journeys on which subsistence can be reclaimed include trips to conferences and seminars, or visits to suppliers, trade shows, or your accountant – simply put, they’re outside of the regular working pattern. However, subsistence can only be reclaimed when deemed reasonable. There’s no hard and fast rule here, but generally speaking, having a sandwich and a coffee at a conference would be reasonable, but having a bottle of champagne and a three-course meal afterwards wouldn’t.

What are the current HMRC subsistence rates?

Employers can either fully reimburse employee expenses including subsistence costs, or go along with the HMRC benchmark rates, which are limited to three meal rates over 24 hours. If you do decide to use the HMRC subsistence rates, you will need to apply to HMRC via Form P11Dx beforehand. The rates, according to HMRC guidance EIM05231, are as follows:

  • Breakfast rate - £5

  • One meal (5 hour) rate - £5

  • Two meal (10 hour) rate - £10

  • Late evening meal rate - £15

The breakfast rate may be paid when an employee leaves home both earlier than usual and before 6am, and buys breakfast after they leave home and begin the journey. The one meal rate may be paid when the employee has been travelling for at least five hours and bought a meal, while the two meal rate may be paid when the employee has been travelling for at least 10 hours and bought at least one meal. Finally, the late evening meal rate may be paid when the employee is working later than normal, finishing work after 8pm, and buys a meal they would usually have at home before the end of their journey.

Subsistence expenses and self-employment or working from home

Generally, it’s difficult for a self-employed individual to claim subsistence costs, as – in legal terms – they essentially are their business. It’s easier for a director of a limited company to claim, as they’re considered separate from the business, and it’s simpler to prove that a journey was taken for business rather than personal reasons.

Even when an individual works from home on a regular basis, this doesn’t mean their home can be treated as their workplace – there needs to be evidence that there’s a requirement for them to work at home, rather than elsewhere for any trips/expenses to be tax deductible.

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