Pre-Budget Report – Workplace canteens
Changes have been announced to restrict the use of salary sacrifice arrangements which allow employees to obtain meals with a reduced liability to tax and National Insurance Contributions (NIC’s). The changes will affect certain employers and employees who currently benefit from these arrangements.
HMRC are aware that a number of employers have developed arrangements to 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 are in effect using a designated amount of their gross remuneration to fund the purchase of food and drink at work.
The 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.
The changes will take effect from 6 April 2011.