When you’re self-employed and going on your lunch break, you can claim back on some of your lunch expenses. However, you can’t go and buy all the food in the world and claim it’s your lunch, so what can you claim back? In this article, we explain how this works and how best to benefit from it.
Claiming on expenses
Being self-employed has many benefits and allows you to claim back all the business expenses that you spend out. Working through your own limited company means you even get a reduced rate to pay. The Corporation Tax rate since April 1st, 2017, has been at 19% so it is totally worth it to claim that reduction. Make sure to include every eligible expense in your yearly accounts so you can save your company valuable bits of money which will add up over the years.
If you, however, work for a sole trader and not a limited company, you can reduce sole trader profits by checking your allowable business expenses. This then will allow you to spend less on National Insurance and Income Tax when you go to complete your self-assessment.
The rules of lunch expenses
HMRC explains when it comes to expenses, that the general rule is you can claim back on expenses that are “wholly and exclusively” for the purpose of trade. This is why when it comes to food and drink the rules can become a bit hazy and confusing because eating and drinking is also a necessity to survive a day at work.
There are certain situations where you can get some money back for your lunchtime treats. Their rule is that food can be claimed as a subsistence as long as it is outside of your normal working routine. This means that it is unlikely, if you attend the same workplace every day, that you’ll be able to claim money back for subsistence being an allowable expense.
Just because HMRC never wants to do anything simple, it all gets a bit confusing depending on whether you are a sole trader or a limited company. Make sure you do all your research so you don’t get too caught out on what rules apply to which.
There are also different rules on claiming expenses depending on whether your business is classed as temporary or permanent. The rules are quite complex but in more simple words, if your business works for a continuous period of more than 24 months then your business is no longer temporary. This means you can then no longer claim any expenses incurred. A continuous work period takes up 40% or more of your time. This also goes for if your attendance at work follows a somewhat strict “pattern”, like the same days each week for 24 months. This then classifies your business as permanent and the same claiming rules then apply.
The basic rule then is if you decide to spend over 40% of your collective time at your client’s site then you can claim subsistence, tax relief, and expenses but only for 24 months. After this period, or if you realise that you will be spending longer at a client’s site then you can no longer claim expenses as your business is then permanent.
How can we help?
Here at Devonshire Green, we want to be there to help you with all your expenses and accounts. Claiming money back from a self-employed business is exactly something we can and are happy to help you with. We can offer you a free consultation when you contact us using the form of if you call us on 020 8747 0160. We can then proceed from there if you’d like our services for some extra help along the way. We also offer lots of other various services that you can check out here.