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Introduction

The provision of canteen or meal facilities for staff is a common benefit. The provision of this benefit can take a number of forms, including subsidised canteens, meal vouchers or free meals. Some employers provide cash lunch allowances.

The tax, NIC and reporting requirements depend on what is provided and how it is provided. There are some exemptions available, each with their own criteria.

Exemption for free or subsidised meals

There is a wide exemption for free or subsidised meals provided by the employer in ITEPA 2003, s 317. There a number of criteria to be met for this benefit to be free of tax, NIC and PAYE reporting requirements. The employer can provide a free meal, a subsidised meal, or a voucher or token to obtain a free or subsidised meal.

The exemption applies equally to the provision of free or subsidised meals as it does to vouchers which achieve the same result.

HMRC’s guidance on this area can be found at EIM21670 onwards. See Simon’s Taxes E4.777B.