Subsistence allowance: HMRC's rules on meals and overnight stays

A subsistence allowance is money an employer pays towards meals and other necessary costs when someone travels for work. HMRC lets it go tax-free in two ways: the employer repays what was actually spent, or pays a flat meal allowance at HMRC's benchmark rates of up to £5 for a qualifying journey of 5 hours, £10 for 10 hours and £25 for 15 hours still going at 8pm. Either way, the trip has to be genuine business travel, not the daily commute.

That is the short version. The rest is the small print that decides whether lunch is a business expense or just lunch.

What counts as subsistence

GOV.UK defines subsistence as meals and any other necessary costs of travelling, such as parking, tolls or business phone calls. Most people mean food and drink, plus the hotel when the trip runs overnight.

The test is that the cost is attributable to the business journey. HMRC's own example: a sandwich bought at the station on a work trip qualifies; a sandwich made at home and eaten on the train does not, because it was not bought on the journey. Once a meal qualifies, the full cost counts. Nobody deducts what dinner would have cost at home. HMRC does have guidance for claims that are "unduly lavish", so the expense account is not an invitation to the tasting menu.

Relief covers:

• meals bought on a business journey
• meals bought while working at a temporary workplace, such as a client's office or a site you expect to be on for under 24 months
• accommodation and necessary meals when the job needs an overnight stay, even a long one

It does not cover meals on an ordinary commute, or meals at your normal workplace however late the meeting ran.

Two ways an employer can pay it

Flat allowances save paperwork for teams on the road a lot, at the price of the VAT and of paying the same for a meal deal as for three courses.

The HMRC meal allowance: benchmark scale rates

Employers can pay these rates tax-free without asking HMRC first. They are set in the Income Tax (Approved Expenses) Regulations 2015.

Where the £5 or £10 rate is paid and the journey runs beyond 8pm, a further £10 can be paid for working late.

Three conditions apply, and all three must be met:

1. The travel is part of the job, or to a temporary workplace, and is not substantially ordinary commuting.
2. The employee is away from their normal workplace or home for a continuous period of more than 5 or 10 hours.
3. The employee actually bought a meal (food and drink) after the journey started.

The rates are a ceiling, not an entitlement. An employer can pay less. If it pays more without HMRC agreeing a bespoke rate, the excess is taxed and goes through payroll. Since 6 April 2019 employers no longer have to check receipts against the allowance, but they must still be satisfied that the qualifying travel happened.

A meal can only be paid for once. If breakfast is on the hotel bill and the employer pays the bill, there is no allowance for breakfast as well.

Bespoke rates, overseas trips and trades

• Bespoke rates. An employer can apply to HMRC to pay a different flat rate, normally backed by a sampling exercise of what staff really spend. Approvals cannot be backdated and last up to 5 years.
• Overseas. HMRC publishes separate scale rates for each country and city, in local currency, covering meals and hotel rooms.
• Working Rule Agreements. The benchmark rates do not apply to employees covered by a Working Rule Agreement, which sets its own rates for particular occupations. If your trade has one, check it before using HMRC's figures.

Overnight stays

There is no benchmark rate for the hotel itself; the employer pays the actual cost, or applies for a bespoke rate. For meals, HMRC says the 15-hour rate will generally apply to an overnight stay, as long as the meals are not already in the accommodation bill.

Personal extras on a night away, like a newspaper, laundry or a call home, are not subsistence. An employer can still cover them tax-free as incidental overnight expenses: up to £5 a night in the UK and £10 abroad, measured across the whole run of nights. Go over and the whole payment becomes taxable, not just the excess, unless the employee repays the excess under a clear policy. Unreimbursed, they get no relief.

If your employer pays less, or nothing

If your employer pays less than you spent on qualifying meals and hotels, you can claim tax relief from HMRC on the difference. You claim for what you spent, not for the gap up to the benchmark rate. GOV.UK says to send receipts showing the date and the name of the hotel or restaurant. You can claim for the current tax year and the four before it, by P87 or on your Self Assessment return if you file one.

Company directors

HMRC's travel guide applies to office holders, which includes company directors, just as it does to employees. A director travelling on company business can be repaid actual costs or paid benchmark rates on the same conditions. More on what directors can put through the company in allowable expenses for a limited company.

Sole traders and the self-employed

Here the rules are tighter. HMRC's starting point is that food and drink is not a business expense, because everyone has to eat. There is no benchmark rate to fall back on either: you claim the reasonable cost you actually paid.

You can claim:

• Meals on overnight business trips, along with the hotel. Reasonable meals taken with the stay count whether or not they are on the same bill. HMRC says the same treatment may extend to self-employed long-distance lorry drivers who sleep in their cabs.
• Day trips outside your normal pattern. Reasonable meals are allowable if you travel to a place only occasionally and the trip is not part of your normal pattern of travel.
• Itinerant trades. If the trade is itinerant at the time, reasonable meals while travelling can be allowable.

You cannot claim the everyday lunch on a regular site or round, or meals at your base. A builder's bacon roll on the usual job is, sadly, personal. For the wider list, see allowable expenses for sole traders.

VAT on subsistence

If you are VAT-registered and pay the actual cost, you can reclaim the VAT on staff meals and hotels on business trips, and the invoice can be in the employee's name. Pay a flat allowance and you cannot reclaim any VAT on it. Pay part of the cost and you reclaim the VAT fraction of what you paid. The details of what the receipt must show are in what counts as a valid VAT receipt.

Frequently asked questions

Can I claim subsistence without receipts?

On a benchmark allowance your employer does not have to check receipts, but you must still have bought a meal on a qualifying journey. To claim tax relief from HMRC yourself, GOV.UK says to send receipts showing the date and the name of the hotel or restaurant.

How much can I claim for subsistence per day?

For actual costs there is no fixed daily cap, only "reasonable" and not lavish. A tax-free flat allowance tops out at the benchmark rates: £5, £10, £25 for 15 hours past 8pm, or £5 or £10 plus £10 for working late.

Are meal allowances taxable?

Not if the journey qualifies and the allowance is within HMRC's benchmark or an approved bespoke rate. Anything above that, or paid for ordinary commuting, is taxable pay.

Can I claim subsistence as a sole trader?

For meals on overnight business trips, on occasional trips outside your normal pattern, or in an itinerant trade. Not for everyday lunches.

Where ClaimSnappy fits

ClaimSnappy records what was actually spent; it does not work out flat-rate allowances. Snap the receipt in the iPhone app or upload it on the website, and it reads the shop, date, total and VAT, and files it under Subsistence. If a meal lands on a day with no journey, fare or hotel logged, it is flagged before anything is sent ("A meal with no journey that day"), because subsistence follows the travel. A hotel with no nights given is flagged too.

You build the claim and send it, with a PDF, a CSV and the receipt photos attached; on a team desk it can go to a manager for approval first. If your employer repays less than you spent, Reports prepares HMRC's own P87, pre-filled, with the evidence.

Every account starts with a 30-day trial, no card needed. After that it is £5 a month on Solo, or £25 a month for a team with six people included. Compare plans.

ClaimSnappy keeps the records; HMRC and your employer decide what is allowed. If a claim is borderline, ask your accountant first.