Food & Drink Expenses for UK Limited Companies. HMRC Rules Explained
A quick, jargon‑free guide to claiming meals, client entertainment and subsistence costs for limited companies
Wondering which coffees, client lunches or motorway sandwiches can go through the company and still keep HMRC smiling? In this post we break down the UK rules on business meal expenses, client entertainment and subsistence allowances, so your limited company can stay fuelled and compliant.
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1. Can I Deduct Client Entertainment?
- Allowed? Absolutely, put it on the company card.
- Tax‑deductible? Sadly not. Client meals are classed as business entertainment, so no corporation‑tax deduction and no VAT reclaim.
- Worth it anyway? If it helps you bag the deal, fill your boots.
2. What Employee Meals Are Tax‑Deductible?
- Staff lunches, late‑shift pizzas or biscuit mountains are deductible and the VAT can be reclaimed, provided:
- The food’s on your premises (or a bona‑fide staff canteen).
- It’s offered to everyone, not just the senior team.
- It isn’t part of a salary‑sacrifice scheme.
Trivial‑benefit bonus: Snacks or coffees under £50 per head sail through with no tax or NI. Directors of close companies have an annual cap of £300, so keep count of those flat whites!
3. How Do I Run a Tax‑Free £150 Staff Party?
Throw one annual knees‑up (Christmas party, summer barbecue, virtual quiz - dealer’s choice) and you can:
- Deduct the cost against corporation tax.
- Reclaim the VAT.
- Keep it tax‑free for employees, so long as it’s open to everyone and costs £150 or less per person (partners count as people too). Blow the limit and the whole amount becomes a taxable benefit, so watch that bar tab.
4. What Can I Claim for Meals While Travelling?
When travel makes eating unavoidable, HMRC offers three hassle‑free, receipt‑free "benchmark" rates:
5. Can I Reclaim VAT on Food & Drink?
Quick‑Fire FAQs
- “Can I claim my morning latte?” Only if you’re travelling for business or it’s supplied to all staff onsite, otherwise it’s personal.
- “Working lunch in the boardroom?” Deductible for staff. Add clients and it flips to disallowed entertainment.
- “Employee buys lunch, I reimburse, OK?” Yes, same rules apply; just keep the receipt or use the benchmark rate.
- “Do the benchmark rates cover booze?” Nope, alcohol needs a receipt and must be reasonable (a pint, not a Prosecco fountain).
Rocket‑Fuelled Takeaways
- Client grub = your treat, not HMRC’s.
- Feed your people and the tax man’s happy (usually).
- Know your £5 / £10 / £25 subsistence cheat sheet.
- Receipts or benchmarks, pick one and stick with it.
Still unsure whether that sushi platter is deductible? Give Blue Rocket Accounting a shout. We translate HMRC‑speak into plain English faster than you can say, “It’s not rocket science - it’s just great accounting.” 🚀
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