If you work through your own limited company, this reduces the amount of tax your company pays. Since 2017, the corporation tax rate is 19% so the reduction is worthwhile. You can include every eligible business expenses in your annual accounts which can save your company some precious pennies. Meal allowance are a valid expense for contractors, and can be claimed if the journey qualifies for the travel expense and you spend money on a meal. You can claim for meal allowance when you are working away from your home. HMRC will allow you to claim for meals under certain circumstances.
Contractors who operate as limited companies should only deduct receipted food expenses. When your work obliges you to eat out, you may deduct food expenses with receipts. Note that only work related food expense can be claimed. It is important that you keep the receipts. If questioned at all in the future by HMRC, receipts will provide documentary evidence to support these claims.
One meal allowance per day can be paid in respect of business travel. The amount cannot exceed:
£5 where the duration of the travel is five hours or more
£10 where the duration of the travel is 10 hours or more
£25 where the duration of the travel is 15 hours or more and is on-going at 8pm.
An additional allowance not exceeding £10 per day can be claimed if the travel is on-going at 8pm and the duration of the travel is 10 hours or less.
If you eat with a business associate or friend and pay for both meals, it is deemed to be a personal spend and not allowed. If you eat with a customer or a supplier – it is called business entertainment. Pay for it with business money by all means. Include the expense in your management accounts but it is disallowed when it comes to calculating your taxable profits at your yearend i.e. these expenses are added back on when calculating trading profits that are subject to tax. Any VAT paid on business entertaining cannot be claimed.
If you would like any further advice on expenses and running your contractor company then please call us on 020 3500 2615 or mail us at info@reliasys.co.uk Visit https://www.reliasys.co.uk
