“Can I deduct food as an expense on trips?”

We’re going to be starting a series of posts about what you need to know when it comes to your taxes. These posts are going to be based on real world questions that we’ve been asked by clients. So, if you need help with anything specific, send us an email and let us know!

This week’s focuses on a question we were sent regarding tax deductibility in relation to  food costs as an expense.

Claiming costs of food as an allowable can be a tricky question as it all depends on whether you operate as a sole trader or a limited company.

The way to look at whether or not it is an allowable expense is looking at the purpose of the expense.

I’m a sole trader, can I claim food as an allowable expense?

The short answer is no, you cannot claim food as an expense.

In the words of a tax case that Revenue cite on this topic “humans eat to live, they do not eat to work”. Food is a living expense and not directly related to business operations.

If you incur expense due to eating away from home, due to work, it is unfortunately not an allowable expense.

Example:

John runs a local plumbing business in Waterford. Every day on his way to his office he stops and picks up a breakfast roll and a cup of tea in his local garage.

At 1pm, John gets an emergency call out for a burst pipe. Once he has fixed the issue, he’s starving so he stops in a local café for a quick sandwich, instead of eating his pre made lunch that he left in the office.

At 3pm he goes out on a scheduled call out. It takes a little longer than he thought so he pops over to the shop opposite the call out and grabs a snack.

John has kept the receipts for all of these expenses and shows them to his accountant.

Unfortunately, as John is a sole trader, none of the food expenses mentioned above can be deducted.

There is some good news though

If food is included in the cost of hotel accommodation as you have to stay away from home due to a business trip, it is an allowable expense. The accommodation and the food is aggregated as one from a tax perspective.

Example:

John gets contracted to do a job in Galway. He leaves at 11am after completing a number of local jobs and arrives in Galway for 3pm. He starts work and works until 6pm. He still has work to do so decides to book into a local hotel so he can continue working in the morning. At the hotel, he gets an early bird dinner and heads up to bed. The next morning, he finishes his job and drives back to Waterford.

John was required to stay overnight in the Galway hotel to complete the job he was on. The hotel is an allowable expense, as is the food purchased at the hotel.

I have a limited company, can I claim food as an allowable expense?

If you’re away from your regular work place for a period of time, you can claim back food expenses that you incur.

What you need to remember is you can claim it back if it was wholly, exclusively and necessarily in the course of running your company.

In the words of Revenue, “an employee may claim a tax deduction in respect of the cost of subsistence expenses necessarily incurred when the employee performs the duties of his or her employment while temporarily away from his or her normal place of work (or is working abroad on a foreign assignment).

This is usually done by the employee submitting an expense claim to their employer for the cost and it would be paid tax free to the employee once it met the qualifying conditions.

There is a daily allowance where you can claim a flat rate deduction once you are away from your normal place of work for more than 5 hours. This is €14.01 and effectively covers the cost of a lunch. If away from your normal place of work for more than 10 hours the daily rate is €33.61 which is to cover the cost of a lunch and dinner. To claim these rates the employee must be a certain distance away from their normal place of work, 8 kilometres for the daily rate and 100 kilometres for the overnight rate

There are also set rates for overnight stay and for when travelling abroad on business journeys. See link here!

If you’d like to know more about what you can, and can’t claim back for your company, we’d be delighted to take your queries!

You can contact us here.