employees lunch expenses

employees lunch expenses

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If an employee is working at his clients away from the office, can the employer reimburse the lunch expenses on production of a receipt. I have an hmrc inspector insisting that the £5 benchmark rates are being used, otherwise it is not tax free. Also claiming where employees take clients out to lunch, only the client expense is tax free

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By taxhound
04th Mar 2013 18:55

He needs to read their own guidance

Here:

http://hmrc.gov.uk/paye/exb/a-z/t/travel.htm

it says

Business travel only covers the following two types of journey which include - where necessary - travel abroad:

journeys forming part of an employee's employment duties - such as journeys between appointments by a service engineer or to external meetingsjourneys related to an employee's attendance at a temporary workplace

As well as including transport costs, the 'necessary costs of business travel' also include:

subsistence costs, such as mealsaccommodation if the travel requires an overnight stayWhat to report, what to pay

Unless your payment to the employee is a scale rate payment that you've agreed with HM Revenue & Customs (HMRC) then the excess amount above the necessary costs of business travel counts as earnings, so:

add it to your employee's other earningsdeduct and pay PAYE tax and Class 1 NICs using your usual payroll procedures

 

So they can claim for actual cost incurred even if this is more than £5 per day if they have evidence to support the claim. (Maybe lunch at the Ritz mught be hard to get past them, but a standard lunch should be ok even if it costs more than £5)

There is also a page for entertaining too .  As long as it is proper entertainment (and not just a jolly with friends who happen to be clients or vaguely in the same line of work as you) then there should be no problem.

Ask him for a technical reference to support what he is saying.

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