IS FOOD TAX DEDUCTIBLE?
Your Tax Shop explain the facts:
So, is food tax deductible? Business expenses vary massively, from vehicles to paper clips. Most of what you purchase for your company is usually tax deductible, but when it comes to food, most business owners aren’t aware of what can and cannot be claimed.
Entertainment of Clients at Dinner Parties, Lunch Meetings or Coffee Breaks
There is a common misconception that the team here at Your Tax Shop, encounter on a regular basis. The myth is that entertaining clients through the purchasing of food is a reasonable tax deduction.
This is a mistake!
Buying food to entertain clients is NOT tax deductible. It doesn’t matter what the purpose of the meeting is; even if it’s to discuss a vital change in shareholders or client policies, you cannot claim it.
The reasoning behind this decision is simple. Food is not a requirement in having a meeting. You can discuss the same things over lunch as you could a desk at work or a park bench, which means the food is not a necessary expense.
Food for Employee Entertainment — e.g. Christmas Parties
So now we’ve cleared up client entertainment, what about employee entertainment?
Employee entertainment can be claimed as a tax-deductible expense (up to £150 per employee). Social functions for staff are considered reasonable expenses by the government.
This £150 is inclusive of all aspects of entertainment. For example, rental of space, tickets to events or booking fees. However, it can be entirely food-related if you take your staff out for a Christmas meal.
Employee Meals on the Job
Tax deductible food always relates to how reasonable and necessary it is for working life. This means that paying for an employee’s food on-site would be considered a reasonable expense, as it is a requirement of living and therefore work.
Meals for employees are tax deductible when relating to the day-to-day business operation, but only under certain criteria. Running a paid cafeteria, or providing a lunch trolley, where employees pay for food, means you cannot claim the items back as an expense, as you’ve recovered the cost. However, if you offer free meals to all staff, you are able claim the costs back to a reasonable extent.
For example, it is reasonable to provide all employees with a basic lunch — sandwich, snack, drink. It is not reasonable to provide a five-course meal with wine and table service.
Personal or Employee Subsistence
Another occurrence where you’ll need to purchase food while on work time is when you or a staff member travel.
When working away from the business premises, you become entitled to claim food back as part of subsistence, in the same way as transport and accommodation. The thought process behind this is that, if we sent one of our Your Tax Shop team to London, it would be unreasonable to consider that they could access and prepare their own food, which means they’d need to buy more expensive meals. Therefore, you aren’t expected to cover the cost personally, which means food becomes a tax-deductible expense.
A Summary of Food Tax Deductions from Your Tax Shop, Tameside
Unlike most expenses, food can be somewhat of a grey area. While some elements are clear-cut, others are not so. With so many instances where you may have to pay out for food during business operations, it can be hard to align the transaction with a specific type of expense. If you have any confusion about if your food was tax deductible, it’s worth getting advice from a professional accountant.
Our expert team at Your Tax Shop based in Mossley and Ashton under Lyne can help! Get in touch today for a bespoke service.
Speak to one of our friendly tax advisors at one of our offices in Tameside:
Ashton office – 0161 339 5689
Mossley office – 01457 837744