Lunch Allowance

missile

Hi,

I have a one man band consultancy limited company. I work from home and visit clients subcontractor's offices. Am I entitled to claim daily expenses and how much without receipts?

I was unable to find an answer on HMRC website.

Many Thanks, :A

trailingspouse

My OH does this, and is often away overnight too. We put all his accommodation costs plus food ('normal' meals while he's away from home, plus entertaining clients as necessary) through as normal business expenses, all receipted.

meg72

missile wrote: »

Hi,

I have a one man band consultancy limited company. I work from home and visit clients subcontractor's offices. Am I entitled to claim daily expenses and how much without receipts?

I was unable to find an answer on HMRC website.

Many Thanks, :A

Dont think you are allowed to claim anything without a receipt, why do you want to? Lunch out and submit your receipt.

missile

Thanks for your prompt responses.

I have been advised that one could claim a per diem: http://www.optimumpaye.co.uk/articles/91-january-2011-per-diems-and-scale-rate-expenses

HMRC has laid down some guidelines over the last year or so to help employers
to comply with the tax rules if they wish to pay unreceipted and fixed expenses
which has been well received by many employers. These guidelines fall into two
categories - UK based travel and travel outside the UK.


Scale Rate Expenses for UK Based
Travel
HMRC has set maximum subsistence rates that can be paid by employers tax and
NI free in relation to employees travelling within the UK on business.


The rates are currently as follows where employees are required to incur
extra meal costs:


Breakfast rate£5The employee must leave home before 6am to commence a
qualifying business journey, i.e. to somewhere other than the normal place of
work, and does not usually do so
One meal rate£5The employee must be on qualifying travel, i.e. away from the normal place of work, for at least 5 hours
for this rate to be paid
Two meal rate£10The employee must be on qualifying travel, i.e. away from the normal place of work for at least 10 hours for this
rate to be paidLate evening meal rate
£15The employee must be working after 8pm, does not usually do so, and must be on a qualifying business journey

Pennywise

missile wrote: »

Thanks for your prompt responses.

I have been advised that one could claim a per diem: http://www.optimumpaye.co.uk/articles/91-january-2011-per-diems-and-scale-rate-expenses

As per that article, you'd need a dispensation to be able to pay those rates. Also as per the article, HMRC need to be satisfied that there is no "Profit" element - i.e. that the amount claim approximates to the amount spent - HMRC do this by asking for a sample of receipts to prove the amounts actually spent. So, to summarise, you still need receipts to prove what you've spent - the allowance figures are merely to simplify the book-keeping - not a get out of jail card to claim for expenses you've not actually incurred.

missile

I am not looking to "claim for expenses not actually incurred".

Most of us eat lunch and I am looking for advice on whether one can legitimately claim a reasonable per diem but avoid yet more paperwork.

missile

It is not helpful to quote the contents of my own link back to me and it would appear that you have both misinterpreted it.

Employers paying up to, and including, these rates can apply for the payments to be within a P11D Dispensation which basically means that the payments do not need to be reported to HMRC each year and HMRC accepts that no tax or NI charges apply.

Thus, the employer can pay a per diem and declare same on a P11D. The employee would be obliged to declare this on his tax reurn.

jimmo

The three possible solutions appear to be:

1) claim nothing from your employer and claim tax relief on your actual subsistence costs.

2) Claim actual expenditure, or a per diem, from your employer. In which case your employer’s taxable profits are reduced, your employer pays you tax free but the amounts paid go on your P11D and you claim relief from HMRC as in 1)

3) Your employer pays you a per diem and applies for a dispensation. As long as the dispensation is granted your apparent objective is achieved.

When I was an employee of HMRC we used to get £4.25 for what is now termed the single meal rate but, realistically, that wouldn’t have paid for a coffee and a donut in a Motorway Services but it would have covered a tea and a bacon sandwich in a Greasy Spoon. So, to me, £5 for a meal is not exactly a generous amount and that may be relevant.

If you choose options 1 or 2 above then, in principle, you should have receipts for every penny spent in case HMRC make an Enquiry into your Return. In practise, occasional claims, say no more than once a week on average, will not cause alarm bells to ring at HMRC and an Enquiry is extremely unlikely. However claims for every working day will definitely look, shall we say, worth looking into.

If you choose option 3 then I seriously doubt that HMRC would bat an eyelid at a dispensation request from a normal employer with a number of staff, paying benchmark rates but you are a one-man company and HMRC will have their doubts.

http://www.hmrc.gov.uk/manuals/eimanual/eim05230.htm

As you are a one-man company you should also bear in mind that an Enquiry into your personal Return would almost certainly trigger an Enquiry into the corresponding company Return and vice versa.

However whilst an application by the company for a dispensation, successful or otherwise, will not trigger an Enquiry, an expenses claim on your personal Return could.

Pennywise

missile wrote: »

Thus, the employer can pay a per diem and declare same on a P11D. The employee would be obliged to declare this on his tax reurn.

And upon enquiry, the employee would have to prove he spent at least the amount claimed on his tax return - i.e. to provide receipts. QED.

Dispensations and per diems are for the admin benefit of the employer not the employee who may still have to prove expenses incurred.

missile

Thanks jimmo for your comprehensive response.

To claim £5 for say 50 days would result in a saving of circa £50 in corporation tax. On reflection, it hardly seems worth the effort and hassle it may create.

HappyMJ

missile wrote: »

Thanks jimmo for your comprehensive response.

To claim £5 for say 50 days would result in a saving of circa £50 in corporation tax. On reflection, it hardly seems worth the effort and hassle it may create.

That's only the scale rate allowance. If you were spending more on meal expenses when working away from home for extended hours then you can save more in tax.

edit: I've never had lunch on expenses it's only ever been breakfast after staying in a hotel overnight or leaving home before 6am or dinner when I arrived home late after 8pm (and after working 10 hours) or were staying in a hotel overnight.