It used to be the case in most offices that you had to bring your own drinks to work, you would stuff your small 1 pint of milk into a mouldy fridge and store your coffee next to loads of other jars with people’s names scrawled over the jar.
Fast forward to today and in most offices you will find that a cup of coffee or tea is included for staff, better yet some businesses are offering more than the standard cup of instant coffee to their staff. In a bid to boost morale and productivity modern businesses are offering staff fancy coffee shop style coffee’s, posh loose teas and even bowls of fruit.
The trend for this makes sense, offer your employee a posh coffee and they won’t spend 15 minutes nipping out to the coffee shop for a latte, offer some fruit to promote health and wellbeing and boost morale.
We love this idea, it makes sense (and we even do this in our office). A common question we get asked is can we claim back the VAT (if there is any) and can this be used as an allowable expense for corporation tax?
Well to answer this question firstly let’s take a look at the HMRC definition of an allowable expense:
An expense is allowable if it is wholly and exclusively for the purpose of business
Most of the expenses you will incur for refreshments (including tea, coffee, milk and fruit) have no VAT on them. If you get super fancy and start having coffee syrups then this has VAT on, as this is for office welfare VAT can be claimed back on this.
Again for corporation tax office refreshments are also an allowable expense as they are for staff welfare.
So the short answer to this question is that yes they are allowable! So it’s time to start encouraging healthy living with office fruit bowls popping up in every office kitchen!