Question, I run a small limited company recruitment agency employing 10 members of staff. I would like to provide a free daily office canteen lunch to our staff – what are the tax issues with this, will it be taxed as a benefit in kind?

Staff Canteen

Answer:

The good news is that it is possible to provide daily office canteen lunches for staff without there being any benefit in kind amounts to report to HMRC.

Furthermore, the full cost would be allowable for corporation tax purposes.

In order for the perk to qualify as tax-free for the employees all of the following criteria would need to be met.

  • The meals are available to all staff without exception
  • The meals are provided on site
  • They are on a reasonable scale
  • They do not form part of a salary-sacrifice scheme or flexible remuneration agreement.

 

Two of my staff irregularly work from home, does this exclude us form the possibility of the lunches being tax-free?

So long as the lunches are made available to all members of staff should they be in the office then they would still qualify as tax-free. The take up of the offer is immaterial it is the availability that is key to meet the terms of the exemption.

Once a month we have an office meeting and have food brought in by outside caterers, would this qualify for the exemption?

So long as only staff attended and all staff were invited to this and the spend was on a reasonable scale then there is no reason why this should not qualify for the exemption.

What is meant by reasonable scale?

There is no hard and fast rule to determine what a reasonable lunchtime spend would be for the benefit in kind exemption to apply so you should apply common sense and not be excessive. For example, sandwiches, snacks and fruit would be fine.

Can I offer a subsidised meal to staff as opposed to paying in full?

Yes, if you have an office canteen you can offer meals at a subsidised rate for staff. Again, all other criteria would need to be met for the exemption to apply.

Some of my staff have to occasionally work at clients’ premises with no opportunity to make it back to the office for lunch– can I still provide these with a lunch?

When your employees are temporarily away from their regular workplace you can pay the cost up to a reasonable scale without there being any benefit-in-kind issues.

As with all perks provided to employees the rules can become complex so if you are in any doubt as to the tax treatment of a benefit we recommend seeking the advice of an experienced and qualified accountant.

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