Free meals at work?
Draft legislation has been published to restrict the tax exemption for meals provided to employees in workplace canteens. This follows the recent pre-budget announcement where the Chancellor made clear his intention to restrict the use of salary sacrifice schemes that sought to exploit the general rules.
HMRC are aware that a number of employers have developed arrangements that go beyond the intended exemptions where free or subsidised meals are provided to employees or directors. The proposed revisions will remove the tax exemption in circumstances where employees effectively use part of their gross remuneration for the purchase of food and drink at work.
The current exemption will continue to apply in relation to general subsidies for canteens that are available to all employees, for example where the employer provides a general subsidy that is reflected in lower prices in the canteen and where the meal is on ‘reasonable’ scale.
It is expected that the changes will take effect from 6 April 2011.