Drinks as business expense?

[HandyRocker]

Ok, I dont mean I wanna claim my friday night booze up. I wish I even had time for that!

I'm a musician. I play gigs in the west end 2-3 nights a week. I can't bring my own drinks into a pub or club, so I usually buy a lime and soda or a coke. Several during the night, since I'm there usually for around 4 hours. Sometimes if I do an early set, then do sound engineering for the later bands, I'm there from 6pm until 2:30am.
Even soft drinks ain't cheap these days altho we do often get them free, but for those we don't, are they allowable?

 

[numbersrule]

Hi HandyRocker
It usually boils down to whether or not the drinks can be classified as 'subsistence'.
For example if you were away from your normal workplace on a 'one-off gig' or maybe a tour, say, then reasonable expenditure on drinks ( and food ) would be allowable. There are set criteria for how much can be claimed for 'standard' durations 'travelling' away such as 5+ hours has an allowable rate of £5 equivalent to one 'meal' but it seems to me this could be applied to drinks.
But you must eat as well surely?

 

[MyAccountantOnline]

Ok, I dont mean I wanna claim my friday night booze up. I wish I even had time for that!

I'm a musician. I play gigs in the west end 2-3 nights a week. I can't bring my own drinks into a pub or club, so I usually buy a lime and soda or a coke. Several during the night, since I'm there usually for around 4 hours. Sometimes if I do an early set, then do sound engineering for the later bands, I'm there from 6pm until 2:30am.
Even soft drinks ain't cheap these days altho we do often get them free, but for those we don't, are they allowable?

I'm assuming you are a sole trader - the general rule for an expense to be allowable is that it must be wholly and exclusively for the purpose of the trade.

Food and drink is something we all need and not wholly and exclusively for the purpose of the trade so generally not an allowable expense for tax purposes.

However some exceptions apply.

Have a read here -

BIM47705 - Specific deductions - travel and subsistence: expenditure on meals and accommodation - HMRC internal manual - GOV.UK

www.gov.uk

 

[Paul Kelly ICHYB]

allowable expense for tax purposes

I am always interested in this comment - what are the tax purposes? PAYE, VAT, Corporation tax?

We have so many it is difficult to know!!!

 

[MyAccountantOnline]

I am always interested in this comment - what are the tax purposes? PAYE, VAT, Corporation tax?

We have so many it is difficult to know!!!

Thank you Paul - you are absolutely right to pick me up on that should have said Income tax purposes.

 

[Paul Kelly ICHYB]

But what about in a business (this is a serious question I have always wondered about and forgotten to ask)?

If I purchase a coffee and my ltd co pays for it, if not classed as subsistance, is it just a cost or do I separate it and not declare it as a cost when working out profit?

 

[MyAccountantOnline]

But what about in a business (this is a serious question I have always wondered about and forgotten to ask)?

If I purchase a coffee and my ltd co pays for it, if not classed as subsistance, is it just a cost or do I separate it and not declare it as a cost when working out profit?

Your employer can pay or reimburse the cost of a coffee if it's purchased on a trip which is solely for company business purposes and claim it as an allowable expense for Corporation tax purposes without declaring it on a P11D incuring Income tax and class 1A NIC.

Do you mean buying coffee when out in general or on the way to work etc?

 

[Paul Kelly ICHYB]

Do you mean buying coffee when out in general or on the way to work etc?

The one you covered was the main query, but in the scenarios above it is good to know!

 

[MyAccountantOnline]

The one you covered was the main query, but in the scenarios above it is good to know!

If its purchased by your company or claimed as an expense when you aren't on a business trip eg on your normal commute to work, when you are on a lunch break etc it wouldn't be an allowable expense for Corporation tax purposes and need to be reported on a P11D.

You do have a Trivial benefit exemption which you could look at.

 

[UK Contractor Accountant]

wouldn't be an allowable expense for Corporation tax purposes and need to be reported on a P11D

Would be allowed as company costs IF Reported as a taxable benefit either through payroll or end of year P11D declaration?

Golden Rule is allowable for company if taxed on employee! -akin to being part of remuneration package

 

[MyAccountantOnline]

Would be allowed as company costs IF Reported as a taxable benefit either through payroll or end of year P11D declaration?

Golden Rule is allowable for company if taxed on employee! -akin to being part of remuneration package

I dont want to go too off topic on this thread but I think we may have to agree to disagree on this one. I'd look at whether something is allowable for Corporation tax purposes and then consider whether the employee receives a benefit which needs to be reported on a P11D.

 

[UK Contractor Accountant]

Yes, if a company pays for an employee's private (personal) costs and reports them on a P11D form, the company generally does get tax relief on the expense, but it is treated differently than a standard business expense.
Here is the breakdown of how it works:

1. How the Company Gets Tax Relief

• Deductible Expense: The payment of the private bill is treated as a form of remuneration (earnings) to the employee. Therefore, it is generally allowed as a deduction from the company's profits for Corporation Tax purposes, assuming it is part of the overall remuneration package.
• P11D Reporting: By reporting it on a P11D (or payrolling it), the company notifies HMRC that this expense is not a business cost but a personal benefit provided to the employee.

 

[HandyRocker]

I'm assuming you are a sole trader - the general rule for an expense to be allowable is that it must be wholly and exclusively for the purpose of the trade.

Food and drink is something we all need and not wholly and exclusively for the purpose of the trade so generally not an allowable expense for tax purposes.

However some exceptions apply.

Have a read here -

BIM47705 - Specific deductions - travel and subsistence: expenditure on meals and accommodation - HMRC internal manual - GOV.UK

www.gov.uk

Thanks for the replies, I reallyappreciate it.
I guess my case isn't really covered in the gov advice.
Very few of my gigs are one-off, except the odd festival or corporate event or the odd occasion when I would do multiple gigs or a gig, then a stint on sound where I'd be on the go until the early hours.

Just an anomaly then I guess.
Yes, eating and drinking is something we all have to do. Just that when you have to do it in a posh club in central London, it can be bloomin expensive and over the course of a month, it can really add up. Not like I can bring a flask and a packed lunch like I do during my weekday job. Which you probably already guessed, I'm a Handyman.

 

[HandyRocker]

Oh and yes I'm a sole trader.

 

[numbersrule]

It seems HMRC don't have a separate set of London rates for subsistence. AFAIAA.

 

[Gecko001]

It seems HMRC don't have a separate set of London rates for subsistence. AFAIAA.

I think that has been the case for decades now. I think it went out with Luncheon Vouchers. Remember them?