The information you submit via our enquiry form is shared only with the franchise business(es) that you have selected.

The franchise business will contact you by means of email and/ or telephone only to the email address and phone number you have provided.

By submitting the enquiry form you are consenting to send your personal information to the selected franchise business.

You also agree to receive further newsletter email marketing from What Franchise.

Close

These vital tips will help you run a tax efficient business

These vital tips will help you run a tax efficient business

Clarifying the costs you can claim for legitimate business activities

There’s often confusion among small business owners about what can be claimed against tax for legitimate subsistence, travel and entertainment expenses. This is because it’s a complicated topic, with different rules for different circumstances. So here I’ve outlined the basics:

Subsistence

This means food and drink incurred wholly and exclusively in the performance of the trade. In plain English, this means if you purchase food or drink for living (for example, your normal grocery shop) you can’t claim this as an expense.

However, if you’re travelling on a journey outside your normal pattern of work, perhaps to visit a client, you can claim for reasonable amounts of subsistence during the time of your journey. This is based on the fact that everyone has a normal place of work, for example, an office.

So buying food and drink on the way to and from your office or during the day when you’re at the office cannot be claimed as a business expense. However, if you spend time on the road because you run a van franchise and don’t have a fixed place of work, subsistence can be claimed while you’re at work.

Accommodation

Similarly, claiming for accommodation that is necessitated by the trade, where you are away from your normal place of work to conduct business, is allowable. An evening meal if staying away would also be permissible.

However, if you took your family away with you, only your accommodation and subsistence could be claimed against tax. If you’re taking members of your family on an away trip, you would need to be able to prove it was for genuine business purposes.

Travel

Travel expenses fall under similar rules. Mileage to and from a normal place of work cannot be claimed, nor can train tickets. However, travel to visit a client, supplier or to attend an exhibition, for example, can be claimed. For car travel, it’s 45p per mile for the first 10,000 miles then 25p per mile thereafter.

Entertainment

Entertainment falls into two distinct categories: customers and suppliers and staff. This is where it gets a little complicated.

Entertainment for customers and suppliers, such as the cost of taking them out to lunch, is deemed a business expense for the trade, but for tax purposes it’s disallowed. In other words, the cost can be claimed against net profit, but the business doesn’t receive tax relief on the cost.

Entertainment of staff on the payroll, however, can be claimed against tax. This includes annual events such as Christmas parties if certain criteria are met. In this way, £150 per person per year can be claimed.

Events such as parties need to be open to all and not restricted to just directors. The £150 can also cover the provision of a ‘plus one’ for each staff member. Anything up to £150 per person per year is allowable, although anything over that amount may give rise to a taxable benefit on the employee.

Taking staff out to lunch is separate and classed as incidental and allowable if the expense claim is not excessive.

The author

Billy Whitaker is a client relationship manager at d&t, an award-winning chartered accountancy and business advisory specialist

Exciting Franchise Opportunities

Snap Fitness logo

Start your own Snap Fitness franchise

Profit Chart
Funding Support Available ? Help is available. Check out our franchising funds guide.

Yes

Find Out More
Expected Revenue After 2 Years

N/A

Request Free Information
Find Out More
Snap Fitness logo

Request Free Information

Send a free enquiry to Snap Fitness for further information!

By sharing your email, you're agreeing to our privacy policy, cookie policy and terms & conditions.
Certax Accounting logo

Start your own Certax Accounting franchise

Profit Chart
Funding Support Available ? Help is available. Check out our franchising funds guide.

Yes

Find Out More
Expected Revenue After 2 Years

£92,000

Request Free Information
Find Out More
Certax Accounting logo

Request Free Information

Send a free enquiry to Certax Accounting for further information!

By sharing your email, you're agreeing to our privacy policy, cookie policy and terms & conditions.
Trail Runners logo

Start your own Trail Runners franchise

Profit Chart
Funding Support Available ? Help is available. Check out our franchising funds guide.

Yes

Find Out More
Expected Revenue After 2 Years

£40,000

Request Free Information
Find Out More
Trail Runners logo

Request Free Information

Send a free enquiry to Trail Runners for further information!

By sharing your email, you're agreeing to our privacy policy, cookie policy and terms & conditions.
Guardian Angel Carers logo

Start your own Guardian Angel Carers franchise

Profit Chart
Funding Support Available ? Help is available. Check out our franchising funds guide.

Yes

Find Out More
Expected Revenue After 2 Years

N/A

Request Free Information
Find Out More
Guardian Angel Carers logo

Request Free Information

Send a free enquiry to Guardian Angel Carers for further information!

By sharing your email, you're agreeing to our privacy policy, cookie policy and terms & conditions.
Mail Boxes Etc. logo

Start your own Mail Boxes Etc. franchise

Profit Chart
Funding Support Available ? Help is available. Check out our franchising funds guide.

Yes

Find Out More
Expected Revenue After 2 Years

N/A

Request Free Information
Find Out More
Mail Boxes Etc. logo

Request Free Information

Send a free enquiry to Mail Boxes Etc. for further information!

By sharing your email, you're agreeing to our privacy policy, cookie policy and terms & conditions.
View all opportunities

Must Read Articles

View all Business Advice