Do you ever find yourself sitting in a meeting, enjoying a cup of coffee that you paid for out of your own pocket, and find yourself wondering if you could claim it back? As an employee, it’s quite simple, but as a business owner, it is far less clear cut. You may have to travel to see clients and conduct meetings in cafes or restaurants, and most of which will come out of your pocket. It’s easy to assume that every food/drink purchase can be classed as a business expense, but it’s not that simple.
Is Travelling A Big Part Of Your Business?
The most significant difference is if your business relies on travel, or if you travel a lot because of your business. If you have to travel to various places to run your business and to please your clients, then yes, you would be able to claim such expenses. However, if you are merely travelling from your office to theirs, and have a coffee along the way, this isn’t an acceptable expense.
Money Spent Outside of Working Hours
If buying drinks and meals are a part of your job, then you cannot claim it back as an expense. However, if you are hosting a conference or training day that requires such expenditures, then you could claim it back. The reason for this is that you would be doing something that is out of your ‘normal’ routine.
If you are staying away for business purposes, then the food and drink purchased will be an allowable expense. This is only if it is for business purposes; if you stay overnight to see friends/family, then these costs will not be claimable.
Current and Potential Clients
If you decide to treat your clients to a meal out, or if you want to try to win over a potential client, the costs will be considered as an expense. They can go through your accounts, but you will not be able to get tax relief on them. HMRC considers these events as entertainment rather than a business cost.
The rules surrounding what you can and can’t claim are quite tight, so it’s always good to be in the know. Don’t get caught out, work with the right accountant for you and your business, and get in touch to see what we can do to help ease the burden.