Can I claim meal expenses for my e-commerce business?

Correctly claiming your expenses can make a substantial difference to your bottom line in the early days of trading, but do you know what you can and can’t include? Meal expenses aren’t as black and white as many may think, so let us steer you in the right direction.

Whether you claimed back that lasagne at a wholesaler meeting last week is unlikely to be what makes or breaks your e-commerce business, but you do want to ensure you claim back everything you’re entitled to. This will help you maximise your business’ profits and minimise your tax bill, especially when margins are low or you’re just starting out.

HMRC’s Rule

With matters of tax, you are always best to take your information straight from the source. HMRC’s guidance on meal expenses states that they must be “wholly and exclusively” for the purposes of trade. This automatically complicates matters as food and drink are rarely solely for trade, they are more often than not just part of your daily life.

To separate what is for trade and what is for survival, your meal must be outside of your normal routine. For example, if you buy a sandwich from the deli every day you work at the office, this is not an allowable expense. If you took a client for steak while you hammered out a deal, then it is likely allowable.

Sole Trader or Limited Company

The rules on allowable meal expenses are also slightly different depending on the status of your business. While all self-employed people can claim back some business expenses, but within a Limited Company whether you are a company director or not can make a difference.

Meal expenses for directors

If you incurred the meal expenses entertaining a client, stockist or other important person to your business then you can claim your expenses as they were incurred performing your duties. These costs are disallowed in terms of profit so will make no difference on your bottom line. These cannot be claimed if you are a sole trader.

Sole Traders and meal expenses

Sole traders can claim for meals on any overnight trips for business purposes. If the purpose is a mix of business and leisure than you will need to account for that accordingly.

Employees expense claims

If you employ workers, then you will be required to cover accommodation and meal expenses if they travel for work purposes. A set cap dependent on the area of travel is standard practice, and receipts must be obtained for accounting purposes.

Accounting for meal expenses for e-commerce
Ethan Hu

Meal expenses with a movable workplace

With an increasing number of us choosing to work remotely, it is important to note HMRC’s rules on whether a workplace is temporary or permanent. If you work somewhere continuously for more than 24 months (such as a rented office, a co-working space etc.) than that workplace is no longer temporary, and you won’t be able to claim any meal expenses incurred through being there. Continuous work is defined as 40% or more of your working hours.

Additionally, this is the case if you have a set pattern. If, for example, you go for a meeting with your stockist every Tuesday and work out of their office, then HMRC may decide this is no longer outside of the norm, so you won’t be able to claim your meal expenses.

What to remember

The two key things to remember with meal expenses, and all other expenses, are to document your spending and to consider whether it was wholly, partially or not at all necessary for business purposes. E-commerce business owners are likely to travel to meet stockists, logistics solutions and larger clients but are unlikely to have a continuous need for local lunch meetings with unrelated business
acquaintances. If you can’t justify it to yourself as a business expense, then it shouldn’t be appearing in the accounts.

Need help with your expenses?

At Unicorn Accounting we want you to get the most out of your business, and a piece of that puzzle is claiming back the right expenses. If you want to discuss your expenses, or how you can grow your e-commerce business, then get in touch today.

The best time to start is now.