Self-employed daily food allowance

Self-employment is a situation where in which an individual is working for himself rather than working for an employer against monthly salary or wage and although various agencies see and define self-employment in their own way, generally self-employed people includes sole traders, contractors, director of a limited company or those having partnership in the businesses and this term is often

misunderstood as being a business owner, both are different situation, where in the former one, the person is working and involved in day-to-day operations of the company whereas in the later case, he is the person who owns the business but does not work and involved in the day-to-day company operations. As per 2016 statistics, there are approximately 14 million self-employed workers in the United Kingdom and UK law allows them to work as a sole trader or as a partner in a limited liability partnership, but not through an incorporated or unlimited liability company and thus there are various types of self-employment such as:

Being self-employed, you are allowed to include your food and drink bills as allowable expenses, provided that the expense is done while you are on a business trip. However, you cannot claim the same if the food you have indulged in a lavish or extravagant one and HMRC allows you to deduct 50% of your meal’s actual cost in case you have saved the receipts and 50% of the standard meal allowance if you have the records of the time, place and business purpose of your travel but not your actual meal receipts.

UK government per diem rates, simpler and efficient to manage business travel expenses. The rules applicable on meals i.e. food and drink is similar to that of travel expenses i.e. the travel must be allowable and qualify as business travel i.e. you must be away from your workplace and thus eating your lunchbox at your desk does not qualify as allowable expense. One of the allowable scenarios of food or meals claim would be if you are staying away from home overnight to work the next day in order to conduct the business and thus in order to claim self-employed daily subsistence allowance as an allowable expense, it must meet below mentioned conditions:

• The expenses incurred on foods and drinks must be during your business travel only and
• You travel to the place or the location occasionally and not on a regular basis as a part of your business.
• You stay overnight on a business trip.

HMRC has reviewed it policy of food allowance for the self-employed and has now included the traders who don’t use hotels such as cab or taxi drivers who sleep in their taxis and thus they can also claim the cost of their meals even if they are not claiming the cost of accommodation, because they are not using one. Also, HMRC has incorporated situations where you are staying with your friend while travelling but having food and drinks outside. HMRC introduced an advisory system of benchmark scale rates in order to list out allowable business subsistence expenses, such as:

• Breakfast rates: A standard rate of £5 can be paid if you are leaving the house earlier than usual and before 6 a.m.
• One meal rate (five hour rate) – A standard rate of £5 can be paid if you are away from home or your normal place of work for more than 5 hours.
• Two meal rate (10 hour rate) - A standard rate of £10 can be paid if you are away from home or your normal place of work for a period of at least 10 hours.
• Late evening meal rate (irregular late finishers) – A rate up to £15 can be paid if you have to work later than your usual working hours.