You might spend a lot of time working away for your company. These business trips can be hard work, and at the end of a long day of meetings you return to your hotel to relax over dinner and a glass or two of wine. If you want a tax deduction for the cost of this, must you stick to the house white or can you push the Taxman’s generosity further?
Under general income tax law, as a director or employee you are taxable on the full amount of “emoluments” received, which includes expenses. However, there is an exemption for expenditure necessarily incurred in the performance of your duties. This covers related subsistence costs. In practice, this includes the cost of a “reasonable level of refreshment (both alcoholic and non-alcoholic)” and refreshments such as tea and coffee or soft drinks between meals. So how far can you push this?
Tax inspectors have to stick with the phrase “on a reasonable scale” when trying to reject deductions for directors’ expenses. They can’t treat your expense claim as unreasonable simply because it’s different from the provision for other staff, even if it’s more generous.
If you have other employees then it’s worthwhile having an expenses policy. Alter your company’s expenses policy to cover alcoholic drinks taken in conjunction with a meal. It should say what you consider a reasonable level of alcoholic refreshment is with a meal when working away on business. For directors this could be a pre-dinner drink and half a bottle of wine with the meal.
You could also apply to HM Revenue & Customs for a P11D dispensation for reimbursed expenditure so it doesn’t have to be reported on form P11D.
If you work away from home and want to know what allowable expenses you can claim, then contact us today.