What is subsistence?

Subsistence is the accounting term used to describe food & drink and other incidental costs of travel such as accommodation. It is an allowable deduction when incurred by an employee or office holder in conjunction with a qualifying business journey such as business travel & overnight stays.

All claims must be backed up by receipts, unless you have agreed a scale rate system with HMRC.

From April 2019 there are some changes due in the area of subsistence for employees which we will take a look at along with some of the questions we most frequently get asked. Please note that the rule for employees are different than the self employed and so people can fall foul of this.

What is changing on 6th April 2019:

  • The employer will have to have a system in place to check the employee has undertaken a qualifying journey.
  • Employers will no longer need to check receipts where HMRC scale rates are used both in terms of UK and overseas scale rates

The Finance Act 2019 will put all of HMRC’s benchmark scale rates on a statutory footing.

Can I reimburse my employee for their lunch?

When they are travelling on business, entertaining customers, or when lunch is provided at a conference or meeting to ensure continuity of work it is ok to do so. For example if you have a training day and order pizza in for the staff then that would be deductible as it will ensure continuity of work.

How much can I reimburse for subsistence?

There is no upper limit however an employer can only reimburse expenses if there are actual expenses incurred. It can reimburse round sum amounts using scale rate payments

Can I claim VAT back on subsistence?

Yes provided the employee gives you a VAT receipt

If you are unsure about subsistence payments and would like more advice please call us on 01782 479699.