Tax Free Business Meals
With effect from 6 April 2009 the costs of meals whilst travelling on business can be deducted from your business profits saving you Income Tax and National Insurance.
Previously you could only claim the relief if the cost was incurred in connection with an overnight stay and it was not practical for you to return home. The rules have now been relaxed to include the cost of food and drink where it is incurred during any business journey. This could include anything from a takeaway sandwich to a meal at a restaurant.
As before, costs incurred when on journeys for non-business or personal reasons are not allowable.
You need to keep all receipts for the costs of food and drink and include these in your books and records to ensure that the correct cost is claimed when preparing your year end accounts.
In addition to the above, you can also pay for the cost of meals for employees free of Income Tax and National Insurance. HM Revenue & Customs (HMRC) will allow you to pay up to the rates shown below and providing the payments do not exceed these rates, there will be no Income Tax or National Insurance to pay.
Rate Type Up To Employee Conditions
Breakfast rate £5 Starts work before 6am and starting work before 6am is irregular.
One meal rate £5 Working away from the normal workplace for more than 5 hours.
Two meal rate £10 Working away from the normal workplace for more than 10 hours.
Late evening rate £15 Working until after 8pm and working after 8pm is irregular.
Please note that the rates are not applicable for employees who regularly start early or work late (i.e. shift workers).
If you would like to take up this system of covering costs of employees’ meals, the team at David Allen & Co can help complete the necessary forms for you and submit these to HMRC.