How to Claim Travel, Food & Coffee Expenses: Tax Relief Guide for Small Business Owners

Managing travel, food and coffee expenses is a minefield:

• It’s the most common type of expense

• You must keep track of the paperwork

• It’s easy to get the tax deduction wrong or miss out on it. This can cover VAT, corporation tax (limited companies) or income tax and national insurance (sole traders)

In this blog post aimed at single director companies and sole traders, I’ll talk about the most common pitfalls and explain how to stay compliant while maximising your allowable deductions.

Coffee at a client

Why Travel and Subsistence Expenses Matter

Whether you're grabbing coffee with a client or staying overnight for a business conference, these costs can add up. But not all expenses are treated equally under UK tax law. Understanding the difference between ordinary commuting, temporary workplaces, and subsistence is key to knowing what you can and can’t claim.

The Quick Guide

What	Detail	Can I Claim Tax Relief?
Ordinary commuting	To and from a permanent workplace	No. Never.
Temporary workplaces	Client contact for less than 24 months or less than 40% of your time	Yes
Subsistence	Food and drink while travelling for work, e.g. visiting a client or a work conference	Yes
Client entertaining	E.g. coffee with a client	No
Staff entertaining	Staff Christmas party	Yes (it’s complicated)

This is a very general guide, and the travel expense tax rules have a lot of grey areas. For example, if you are an employed NHS doctor,

• Travel between two hospitals which are two separate jobs is not allowable

• Travel between two hospitals which are under same job is allowable

• In both cases, travel to the hospitals is not allowable. This is ordinary commuting

• In all cases, on-call emergency patient visits are allowable

While this example doesn’t apply to business owners directly, it illustrates how nuanced HMRC’s travel rules can be.

Understanding Temporary vs Permanent Workplaces

The rules around travel expenses hinge on whether you're traveling to a temporary or permanent workplace. A temporary workplace is one where you work for less than 24 months or for a short-term project. Travel and subsistence to these locations are deductible.

However, if you work at the same location regularly or for more than 24 months, HMRC may classify it as a permanent workplace, disallowing travel claims. This is especially important for contractors and directors who work from home and travel to client sites.

What Travel Expenses Can I Claim?

If you’ve worked out that you can claim travel expenses, the type of expense you can claim for include:

1. Public transport fares – including trains, buses, trams, and underground travel.
   

2. Taxi
   

3. Plane tickets
   

4. Mileage allowance – for using your personal vehicle for business travel, based on HMRC’s approved mileage rates. For cars, HMRC allows 45p per mile for the first 10,000 miles, and 25p thereafter. From 1 September 2025 the advisory electric rates for fully electric cars will be: 8 pence per mile for home charging and 14 pence per mile for public charging
   

5. Hotel accommodation – when staying overnight for business at a temporary workplace
   

6. Subsistence costs – meals and drinks purchased while travelling for business (not including client entertainment)
   

7. Parking fees –excluding fines or penalties
   

8. Incidental overnight expenses – small costs like laundry, phone calls, or tips while staying away for work

What VAT Can Be Claimed on Travel Expenses?

VAT can be reclaimed on certain travel expenses incurred for business purposes, but only if the business is VAT-registered and the expense includes VAT. For example, VAT on hotel accommodation, and meals may be recoverable if the invoice is made out to the business and the expense is not classified as entertainment. However, VAT on business entertainment (such as client meals or coffees) is generally not reclaimable, even if the expense is legitimate and recorded. For subsistence expenses—such as meals during overnight business travel—VAT may be reclaimed if the expense is for the employee or director and not for entertaining others. Always ensure you retain VAT invoices and check that the supplier is VAT-registered.

Should the Company Pay for Entertaining Clients?

Even though you can't claim Corporation Tax relief or VAT on client entertainment, it's still better to pay for it through your business rather than personally. This avoids having to withdraw funds (which could be taxed as income) to cover the cost yourself.

Mistake 1: Not Capturing All Records

One of the most frequent errors is failing to keep receipts. You might buy a coffee during a business meeting and forget to record it, or lose the receipt entirely. Without documentation, you can’t claim the expense.

The solution? Use technology. Receipt capture apps (such as Hubdoc) integrated with your accounting software allow you to snap receipts and upload them instantly.

Mistake 2: Incorrect Categorisation of Expenses

Not all meals are created equal. Buying lunch for a client is considered business entertainment, which is not tax deductible—even for limited companies. However, meals during overnight travel to a temporary workplace are considered subsistence and are deductible.

To stay compliant, categorise expenses clearly. Use labels like “business entertainment,” “subsistence,” “client meals,” or “travel.” This helps your accountant—and HMRC—understand which expenses qualify for relief.

Mistake 3: Double Counting in Software or Spreadsheets

Even with good record keeping, many business owners accidentally record the same expense twice—once from the bank transaction and once from the receipt. This inflates your deductions and can cause problems during tax filing.

To avoid this, reconcile your entries. Match receipts with bank transactions in your accounting software. If you're using spreadsheets, ensure you’re not adding up both sets of records separately.

Final Tips for Small Business Owners

1. Capture receipts immediately using apps
   

2. Categorise expenses accurately to distinguish between entertainment and subsistence
   

3. Reconcile entries to avoid double counting
   

4. Understand workplace definitions to determine if travel is deductible
   

5. Review contracts regularly to avoid permanent workplace classification
   

6. Check VAT invoices and know which expenses allow VAT recovery

By following these steps, you’ll not only stay compliant but also ensure you’re claiming every allowable expense. For directors, contractors, and small business owners, mastering these rules can make a significant difference in your bottom line.