CAN YOU EXPENSE YOUR COFFEE THROUGH THE BUSINESS?
A £4 flat white doesn't feel like the kind of thing that needs a tax rule attached to it. And yet it's one of the questions we’re asked most often! We get it… coffee is life!☕️
We’re breaking down this super important question and when you can reasonably expense your caffeine fix through your limited company.
So first things first…Coffee isn't automatically allowable through your limited company just because you happened to be working while you drank it. What matters is the context around it, which is why we’re breaking down five common example scenarios below. Once you can see the pattern, you'll be able to make the call yourself in about three seconds at the till!
1. A coffee shop meeting with a potential client
You meet someone in a café to talk about working together. You buy a round of lattes and a couple of croissants while you chat.
This is business entertaining. You can absolutely pay for it from your limited company, and you should, because paying personally means you've taken money out and paid tax on it first. But it won't get corporation tax relief, and if you're VAT registered you can't reclaim the VAT on it either.
One detail that catches people out: your own latte is caught by the same rule. When you're hosting someone, HMRC treats the whole bill as entertaining, not just their half of it.
2. Your morning coffee on the way to your usual desk
You grab a cappuccino to-go on your way to the office or the co-working space you use every week.
If that's a place you go to regularly as part of your normal working pattern such as a co-working space or your own working premesis, the journey is ordinary commuting. Commuting isn't allowable, and neither is the coffee, the breakfast or the lunch you buy along the way.
I know this one stings a bit. It's the coffee that makes the day feel civilised. But the cost isn't there because of a specific piece of business, it's there because that's where you work.
3. A flat white on the 6am train to an all-day conference
You're up before the birds to get to an industry conference two hours away. You buy a flat white to make the journey survivable.
Yes, you can usually claim this one. It's an occasional trip, outside your normal working routine, made for a clear business reason, and the coffee is an extra cost you wouldn't have had if you'd stayed at your desk. The same goes for reasonable meals across the day.
4. Laptop and latte at your local coffee shop
You've had enough of your own four walls, so you decamp to the café down the road for a couple of hours to finish a client project.
The work is real, but the coffee shop is a personal choice. Nothing about that particular project required you to be there rather than at home, so the coffee isn't tax deductible. Café hopping is a lovely habit and a genuinely good one for your head. It's just not one your corporation tax bill will help fund.
5. A matcha at a client's on-site strategy day
You've been invited to present at a client's strategy day on the other side of town, and you pick up a mid-morning matcha while you're there.
Allowable. You've travelled to a specific place for a specific, occasional business purpose, and the drink came with the trip.
Worth knowing for the longer term: if you end up at that same client's offices for a big chunk of your working time (HMRC's benchmark is 40% or more) and that's set to run for more than two years, their office starts to look like a normal workplace of yours rather than a temporary one, and the travel and subsistence stop qualifying.
Summing up
The question to ask isn't "was I working?" It's "did I make an occasional journey away from my usual working base for a specific business reason, and did this cost come with that journey?"
If the answer is yes, claim it and keep the receipt. If you were hosting someone, put it through the company but expect it to be added back for corporation tax. If you were at your usual desk, or on your usual route to it, or somewhere you chose to be for a change of scene, it's a personal cost.
Need support?
If you've been guessing on expenses and hoping for the best, you don't have to keep doing that. We work with female founders running UK limited companies and help them feel calm and confident about their numbers. Get in touch here to book a chat.
