Can a Contractor or Company Director Claim Lunch, Coffee & Staff Biscuits as a Business Expense? HMRC Rules Explained (2025/26)

One of the most common questions we get at MSA Accountants from contractors and limited company directors is: "Can I put my lunch through the company?" The short answer is — it depends. HMRC's rules on subsistence aren't complicated once you understand the logic behind them, but getting it wrong can lead to unexpected tax bills. This guide walks you through exactly when these expenses are allowable, with real-world scenarios for London-based contractors. For a broader overview, see our guide to allowable business expenses in the UK.

1. The Golden Rule: "Wholly and Exclusively"

Every business expense must pass HMRC's fundamental test — it must be incurred wholly and exclusively for the purpose of the business. For meals and subsistence, there's an additional condition: the cost must arise from genuine business travel, not ordinary commuting.

HMRC's Employment Income Manual (EIM31800 onwards) sets out the framework for travel and subsistence costs. The key distinction is between a temporary workplace (allowable) and a permanent workplace (not allowable for travel or subsistence). We cover the broader distinction between allowable and disallowable expenses in our Allowable vs Disallowable Expenses guide.

2. HMRC Benchmark Scale Rates for 2025/26 — How Much Can You Claim?

For directors and employees, HMRC publishes benchmark scale rates — fixed amounts you can pay (or be reimbursed) for meals during qualifying business travel without needing to justify every receipt individually. These rates have not changed for 2025/26 and remain:

3. Contractor Visiting Multiple Sites in London — Is Lunch Allowable?

Let's take a typical scenario: a contractor or company director spends a day travelling around London visiting different client sites for inspections or meetings. On the way, they grab a burger at McDonald's or a cup of tea at KFC. Is this allowable?

Yes — provided the travel itself is allowable. The logic is straightforward:

• The contractor is travelling in the performance of their duties (not commuting to a fixed base)
• The sites visited are temporary workplaces
• The meal is an incidental cost of that genuine business travel
• The amount is reasonable (a McDonald's or KFC clearly passes this test)

The 40% Test in Practice

Say your client visits a central London client office three days a week and other sites for the remaining two days. If that one office is likely to account for more than 40% of their time over a 24-month period, they should seek advice on whether it has already crossed into permanent workplace territory. This is especially relevant for CIS contractors and builders who move between multiple sites regularly.

4. What If the Contractor Also Has Their Own London Office?

This is a very common situation and it actually strengthens the position — not weakens it.

Having a fixed London office creates a clear separation between two types of travel:

• Home → Office: Ordinary commuting — never allowable
• Office → Client Sites: Business travel — allowable, and subsistence during this leg is claimable

So if your client heads out from their office in the morning to inspect sites across London and grabs a lunch on the way, the meal cost is a legitimate company expense. The office acts as the departure point, making the subsequent travel clearly business in nature.

The "Triangle Journey" — A Common Grey Area

Where it gets slightly more nuanced is when the contractor travels directly from home to a client site, bypassing the office entirely. In this case:

• The journey to the site is still allowable (it's a temporary workplace)
• But HMRC's "no better off" rule applies — you can only claim the additional cost over and above what the normal home-to-office commute would have cost
• Subsistence during that additional leg is claimable

5. Coffee and Biscuits for Office Staff — Allowable?

Now for the second part of the question: the director buys coffee and biscuits for the office team. Is this tax-deductible?

Yes — and it's actually one of the cleanest employee benefit positions in UK tax law.

Staff Welfare and the Trivial Benefits Exemption

Modest refreshments provided to employees — tea, coffee, biscuits, fruit — fall under staff welfare and are:

• ✓ Allowable for Corporation Tax — reduces your company's taxable profits
• ✓ No P11D / Benefit in Kind reporting required for employees — covered by the Trivial Benefits Exemption
• ✗ VAT not reclaimable on staff entertainment (unless the expenditure relates to an internal business meeting — see below)

A packet of biscuits and a round of coffees comfortably falls within this — no employer return, no P11D, no employee tax charge. Simple.

What About the VAT?

This is where many directors get caught out. The VAT position on staff refreshments depends on the context:

The £300 Annual Cap for Directors of Close Companies

If the director is the only employee — perhaps a one-person limited company — the trivial benefits exemption still applies, but HMRC imposes an additional cap: no more than £300 per tax year in trivial benefits for directors of close companies (ITEPA 2003, s.323B). Beyond this, any excess becomes a taxable benefit. You can find HMRC's full guidance on trivial benefits on GOV.UK — Expenses and Benefits: Trivial Benefits.

6. Practical Summary — What Your Company Can Claim

7. Record Keeping — What HMRC Expects

The claims themselves are straightforward — but HMRC will expect evidence in the event of an enquiry. HMRC's guidance on business travel expenses confirms what records are expected. For subsistence during business travel, keep:

• Receipts for all meals and drinks (even small ones add up)
• A simple travel log showing date, sites visited, and purpose of each visit
• Evidence of the business reason (emails confirming meetings, site visit reports, etc.)
• For staff refreshments: no formal records needed for trivial items, but keep a general expense record in the accounts

8. Frequently Asked Questions

The Bottom Line

For a contractor or company director genuinely out visiting inspection sites or client locations, a meal grabbed along the way is a perfectly legitimate business expense. Having a London office actually makes the position cleaner, not harder — it clearly separates commuting from business travel. And coffee and biscuits for the office team? Entirely allowable, with no P11D headaches, thanks to the trivial benefits exemption.

The key is to ensure the underlying travel is genuinely for business, keep sensible records, and stay aware of the 24-month rule if your client regularly visits the same location. You may also find our guides on allowable business expenses and UK tax allowances for 2025 useful reading.

If you have a client situation you're not sure about, get in touch with MSA Accountants — we're happy to help you work through the specifics.

Disclaimer: This article is based on HMRC guidance and UK tax legislation applicable to the 2025/26 tax year (6 April 2025 – 5 April 2026). Tax rules are subject to change. This content is for general informational purposes and does not constitute personalised tax advice. Please consult a qualified tax adviser for advice specific to your circumstances. MSA Accountants is a registered accounting practice in Hampshire, UK.