Business Travel: Claiming Meals Back From Your Company

Meal expenses are an important, yet often overlooked, aspect of business travel. When employees travel for business, their meals should be covered by their employer, either by providing a company credit card or reimbursing the employee for their expenses. A good meal allowance policy will make business travel easier and more comfortable for employees, and it will also help the finance department to correctly track these expenses. This policy should include a clear definition of what is considered a travel meal and a travel meal allowance, the allowance amounts, the reimbursement process, and what is not included. It is also important to note that, in some countries, meal allowances for corporate business travellers are regulated.

Meal allowance for business travel

A meal allowance policy is an important part of business travel. It makes business travel easier and more comfortable for employees, and it also helps the finance department to correctly track expenses.

Purpose

Provide a clear definition of what is considered a travel meal and a travel meal allowance. What actual expenses are included?

Allowance Amounts

Specify the amounts that employees are allowed to spend. These amounts can vary depending on the destination and the trip duration. Specify a different reimbursement amount for each destination and for different trip durations. For example, a day of travel will be different from an overnight stay. For some countries, specify a different allowable amount for different cities.

Payment Methods

Explain whether employees will pay using the company's credit card or their own. Outline when they should use their own credit card and which payment method the company will use for reimbursement.

Exclusions

Specify what kind of expenses are not included in the allowance to avoid any confusion. Room service and alcoholic beverages are some expenses that companies often don't cover.

Business Meals

A special policy may apply for business meals, i.e., when business meetings take place over a meal. Detail what is considered a business purpose and who will cover the cost of the meal in these cases.

Approval Guidelines

Explain clearly if employees need to receive approval before the expense is made. Include the name of the person in charge of approvals and the platform or method through which approval should be requested.

Expense Reimbursement Process

Be clear about the process to ensure good communication between employees and the finance department. Specify how travel reimbursement should be requested, and set a deadline to avoid any issues. Outline the documents that employees need to submit to request a refund, emphasising the importance of itemised receipts. State whether any other information is needed in the expense report.

In addition to the above, it is worth noting that meals eaten while travelling for business are 50% deductible if certain rules are followed. This applies to both domestic and international trips and the meal does not have to be strictly "business-related". The IRS specifies that the meal should not be "lavish or extravagant" and that either you or an employee must be present at the meal. It is also important to understand the tax implications of per diem payouts.

Dining with a client or prospect

When it comes to dining with a client or prospect, there are a few things to keep in mind to ensure you can take a travel meal deduction from your business expenses. Here are some detailed instructions to help you navigate this process:

Firstly, understand that a meal with a client or prospect must serve a clear business purpose. This could be meeting a prospective client to discuss a potential collaboration or treating an existing client to a meal to strengthen your relationship. The meal expense must be directly related to or associated with your business to qualify for a deduction.

Secondly, ensure that either you, the business owner, or an employee of your company is present at the meal with the client or prospect. It is important to note that the meal deduction doesn't apply if you are dining with your spouse or the client's spouse, unless you can demonstrate a clear business purpose for including them.

Thirdly, the meal must not be considered lavish or extravagant. This means it should be reasonable based on the circumstances and not overly expensive. The meal doesn't have to be basic, but use your best judgment to ensure it doesn't cross the line into extravagance.

Fourthly, keep detailed records of your meal expenses. This includes saving receipts, noting the date, location, business purpose of the meal, and the names and occupations of those present. Proper record-keeping will help you substantiate your claims and avoid issues with the tax authorities.

Additionally, be mindful of any specific regulations in your country regarding meal allowances for corporate business travelers. These regulations may outline reimbursement rates, approved expenses, and other important guidelines.

Finally, consult with a tax professional or refer to the guidelines provided by your country's tax authority to ensure you are complying with all the requirements for meal deductions. The rules can be complex and constantly evolving, so it's important to stay informed to maximize your eligible deductions and stay on the right side of the law.

Meal expenses when attending conferences

When attending conferences, it's important to understand the rules and regulations surrounding meal expenses, especially when it comes to reimbursement and tax deductions. Here are some detailed guidelines and instructions on managing meal expenses while attending conferences:

Understanding Meal Allowances and Reimbursements

Meal allowances refer to the costs covered by an employer or organisation for meals during a conference. It's important to clarify with your employer whether they provide meal allowances and, if so, what their policies are regarding reimbursement. Some companies may have specific guidelines on meal costs, locations, and requirements for reimbursement. It's also essential to know whether the conference meals are included in the registration fee, as this may impact reimbursement eligibility.

Creating a Meal Allowance Policy

If you're in a position to create or influence your organisation's meal allowance policy, here are some key considerations:

• Purpose and Definition: Clearly explain the purpose of the meal allowance policy and define what constitutes a travel meal and a travel meal allowance.
• Allowance Amounts: Specify the amounts employees are allowed to spend on meals, taking into account factors such as destination and trip duration. Provide different reimbursement amounts for different destinations and trip lengths.
• Payment Methods: Outline the payment methods employees should use, such as company credit cards or their own funds with subsequent reimbursement.
• Excluded Items: Specify what types of expenses are not included in the allowance, such as room service or alcoholic beverages.
• Business Meals: Establish a separate policy for business meals, where meetings or entertainment of clients/prospects take place over a meal. Define what constitutes a business purpose and who will cover these meal costs.
• Approval Guidelines: Explain whether employees need prior approval for expenses and provide details on the approval process, including the name and contact information of the person in charge.
• Expense Reimbursement Process: Outline the steps for requesting travel reimbursement, including any deadlines and required documentation, such as itemised receipts.

Managing Meal Expenses

To effectively manage your meal expenses while attending conferences, consider the following:

• Original, Itemised Receipts: Keep detailed receipts that show the food and beverages purchased, as well as the names of the participants/travellers. This helps to substantiate the costs and demonstrate that unallowable expenses (e.g. alcoholic beverages) were not included.
• Conference Registration Information: Obtain and keep conference registration information to document that meals were not already provided as part of the conference package.
• Invoices or Receipts for Food: For conferences and workshops, obtain invoices or receipts for food along with a list of participants' names and affiliations, as well as the conference agenda.
• Alcoholic Beverages: If alcohol is purchased, specify the amount and charge it to a separate, appropriate expense category or chartstring.
• Entertainment Expenses: If meals are incurred while entertaining clients or potential clients, they may fall under the entertainment expenses category. However, there are often stricter rules for what qualifies as entertainment, such as being considered 'reasonable and necessary'.
• Training Expenses: If meals are incurred during training courses or events, they typically fall under the training expenses category and may be tax-deductible.

Understanding Tax Implications

When it comes to tax implications, it's important to consult with an accountant or tax advisor to ensure compliance with regulations. Here are some key considerations:

• Tax Deductions: In many countries, meal expenses incurred while travelling for business, including conferences, may be tax-deductible. However, it's important to understand the specific rules and requirements for deduction.
• IRS Regulations in the US: In the United States, the Internal Revenue Service (IRS) allows for a 50% deduction of meal expenses while travelling for business, as long as they are not "lavish or extravagant". The IRS provides specific guidelines and thresholds for these deductions.
• International Travel: When travelling internationally, it's important to familiarise yourself with the tax regulations of the country you're visiting. Different countries may have varying definitions of "business travel" and requirements for tax deductions.
• Record-Keeping: Maintain thorough records of your meal expenses, including dates, amounts, locations, and the business relationship of any attendees. This documentation is essential for tax purposes and reimbursement claims.

Business meal expenses

A meal allowance policy should outline the purpose, defining what constitutes a travel meal and the expenses included. This policy should be easily accessible to all employees, with clear communication on the reimbursement process and any deadlines for submitting expense reports.

When creating a meal allowance policy, it is essential to specify the amounts employees are allowed to spend, taking into account the destination and trip duration. For example, a trip to a city with a high cost of living or travel during peak season may require a higher daily meal allowance. It is also important to note that many countries have regulations in place for per diem rates, which may affect reimbursement amounts for tax purposes.

The policy should also address how employees will cover their meal expenses while travelling. Will the company provide a corporate credit card, or will employees use their own funds and be reimbursed later? Additionally, it is crucial to specify what is not included in the allowance, such as room service, alcoholic beverages, or snacks.

When employees are travelling for business, it is standard practice for the company to cover their meal expenses. This includes meals during business travel, when dining with clients or prospects, and when attending conferences. It is worth noting that hosting clients or prospects for meals can be quite costly, but it is important for businesses to avoid appearing economical in these situations.

In some cases, employees may require special meals due to specific health conditions or religious beliefs, and these expenses should also be covered by the company. However, it is generally understood that unnecessary snacks, alcohol, and expenses incurred during informal parties or events are not covered by the corporate meal allowance.

Overall, creating a comprehensive meal allowance policy is essential for successful business travel, ensuring employees are well-informed and financially supported while also maintaining clear boundaries for the company's finances.

What a meal allowance policy includes

A meal allowance policy is an important part of a business travel policy. It saves your business time and money and ensures employees can do better business. Here is what a meal allowance policy should include:

Purpose

Provide a clear definition of what is considered a travel meal and a travel meal allowance. Outline what expenses are included. For example, some companies may choose to include snacks and beverages in their meal allowance, while others may not.

Allowance Amounts

Specify the amounts that employees are allowed to spend. These amounts can vary depending on the destination and the trip duration. Specify a different reimbursement amount for each destination and for different trip durations. For instance, a day of travel will be different from an overnight stay.

Payment Methods

Explain whether employees will pay using a company credit card, their own credit card, or a combination of both. Outline the reimbursement process, including the payment method the company will use.

What is Not Included

Specify what kind of expenses are not included in the allowance to avoid any confusion. Room service and alcoholic beverages are some expenses that companies often don't cover.

Business Meals

A special policy may apply for business meals, i.e., when business meetings take place over a meal. Outline who will cover the cost of the meal in these cases and what is considered a business purpose.

Approval Guidelines

If employees need to receive approval before the expense is made, explain this clearly and include the name of the person in charge of approvals and the platform through which approval should be sought.

Expense Reimbursement Process

Be clear about this process to ensure good communication between employees and the finance department. Specify how the travel reimbursement should be requested, and set a deadline to avoid any issues. Outline the documents that employees need to submit to request a refund, including the importance of itemized receipts and any other information that should be included in the expense report.

Frequently asked questions