EIM21671 – Particular benefits: subsidised meals: canteen meals
Section 317 ITEPA 2003
There is no tax charge on the provision of meals for directors or employees if the meal is provided in a canteen or on the employer’s premises and the following conditions are met:
- the meal is on a reasonable scale and
- all employees, or all employees at a particular work location, may obtain a free or subsidised meal (or a voucher for one); and
- in the case of a hotel, catering or similar business, if free or subsidised meals are provided for employees in a restaurant or dining room when meals are being served to the public, part of the dining area must be designated for staff use only and the meals must be taken in that part.
The phrase "on a reasonable scale" (Section 317(2) ITEPA 2003)
should not be interpreted too narrowly. Do not treat the provision
for directors as unreasonable simply because it is different from
the provision for other staff, even if it is more generous, or
better subsidised. In general, you should only assess a benefit in
those cases where the provision is clearly unreasonable. For
example, where it involves the provision of an elaborate menu, fine
wines and cigars. The provision of a glass of wine with an
otherwise modest meal is not unreasonable.
Note that the exemption applies to meals provided in
any canteen. The canteen does not necessarily have
to be on the employer's premises, or restricted to the employees of
one employer. For example, on an industrial estate there may be a
single canteen serving the employees of all employers on the
estate. Meals provided in that canteen are within the exemption as
long as they are available to all employees of the employers
concerned.
Note also that there is no need for all the employees to get
the same level of subsidy for their meal. Provided a free or
subsidised meal is available to all employees, the exemption
applies.
The word "canteen" has its ordinary meaning. A restaurant,
cafe, public house or similar establishment which serves meals to
the public at large is not a canteen.
The exemption also applies to a meal provided to an employee
by a third party, if the employee is working at the premises of the
third party. For example, a contract worker employed by A, who
works on site at employer B, is exempt from a benefits charge if he
enjoys a meal in a canteen provided by employer B for its
employees.
For further information on the exemption in Section 317 ITEPA
2003 see
EIM21672.
