Subsistence is the tax term for food and drink.

This is allowed as an expense if it is bought as part of a qualifying business travel journey, and the VAT can be reclaimed too, if the business is VAT registered.

Employers can reimburse employees using UK Subsistence benchmark scale rates or HMRC’s Worldwide Subsistence rates without any need to check or retain all receipts.

These standard rates enable businesses to give subsistence payments without constant authorising and approval.

 

Requirements

The main stipulations required to claim meal expenses are:

• The cost of food or drink must be incurred after the business trip has started
• The trip must be beyond their usual commute and be done as part of official business.
• The journey must take the employee away from their normal place of work for 5 hours or more.

Since April 2019, HMRC no longer requires businesses to provide receipts for every subsistence cost incurred as part of a business journey if using the scale rates. This means a lot less paperwork for business owners.

As long as your employee has actually spent the scale rate payment on business expenses, you will not need to check every single receipt – it is fine to just check a sample of receipts and keep these on file.

You will have to have a system in place to check that the employee undertook a qualifying business journey.

 

Exceptions

These expenses cannot be claimed if:

• a meal or beverage is not purchased
• the meal does not constitute additional expenditure
• meals have been taken at home
• meals are provided during a training course, conference, or similar activity
• meals are provided on the train or plane and included in the ticket cost

You cannot pay a scale rate if your employee buys ingredients and eats a homemade lunch.

 

Current Rates

The UK scale rates are currently:

	Allowance	Conditions
a)	£5	The duration of the qualifying travel* is 5 hours or more
b)	£10	The duration of the qualifying travel* is 10 hours or more
c)	£25	The duration of the qualifying travel* is 15 hours or more and is ongoing at 8pm
d)	£10	An additional meal allowance not exceeding £10 per day may be paid if an allowance under a) or b) is paid and travel is ongoing at 8pm.

* away from normal place of work in that day

The maximum payable is £25 per day.

 

Staying at a friend’s home

There is no “friends and family” allowance, for staying at someone’s house. (There did used to be!)

However, if your friend/family invoiced you, or charged you a rent for staying there, then this could be declared as an expense on your accounts, if paid for directly by the business.

Your friend would need to declare this on their tax return, but it might be covered by the rent-a-room scheme, so no tax would be due.

 

Costs are greater than scale rate

If the employee spends more on expenses than the amount for which they are reimbursed (and has evidence in support of this) they can claim tax relief on the difference under the normal receipted travel rules.

 

Other costs

If the employee stays in a hotel overnight for work you can also claim the £5 incidental overnight cost, which is to cover newspapers, laundry, etc whilst working away.

 

Summary

It is fine to:

• Pay the actual meal cost when this is more than £5, and this must be supported by receipts.
• Pay the scale rate of £5 (or £10 if for two meals) even if the meal costs less than this. Evidence (e.g., receipt or credit card bill) must be kept, not as proof of the amount, but as proof that an expense on a meal (or meals) was indeed incurred. A daily log summary detailing shops/purchases fits the bill.

Where a business credit card and expense reclaim system is in use, it might be simpler to claim actual costs as the infrastructure should be in place for reporting these subsistence claims.

Further guidance

HMRC has much on this and related topics.

Links here for further information:

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim30240

https://www.gov.uk/expenses-and-benefits-cash-sum-payments/scale-rate-payments

Please get in touch if you are unsure about what you can claim in your business.