BIM47705 - Measuring the profits (specific rules and practices) - receipts and deductions: specific deductions - travel and subsistence: expenditure on meals and accommodation

What to do in practice

General rule

The cost of food, drink and accommodation is not in general an expense incurred wholly and exclusively for business purposes, since everyone must eat in order to live. They are (either wholly or partly) normal costs of living incurred by all and not as a result of trading, see BIM37900 onwards.

Where such costs are disallowable they cannot be apportioned to allow extra costs incurred from the necessity of lunching away from home or the place of business. The attempt to apportion betraying the essential duality of purpose.

Occasional business journeys outside the normal pattern

But extra costs may be incurred wholly for business purposes where a business is by its nature itinerant (for example in the case of commercial travellers), or where occasional business journeys outside the normal pattern are made. Modest expenses incurred in these circumstances may be deducted from business profits.

Overnight subsistence and accommodation expenses

Where a business trip necessitates one or more nights away from home, the hotel accommodation and reasonable costs of overnight subsistence are deductible.

This does not extend to overnight accommodation and subsistence at the base of business operations, even if there is a contractual requirement for the trader to reside in a particular place.

The reasonable costs of meals taken in conjunction with overnight accommodation are allowable, whether or not paid on the same bill.

The same treatment may be extended to traders who do not use hotels, for example, self-employed long distance lorry drivers who spend the night in their cabs rather than take overnight accommodation.

For more detail see BIM37670.