When an employer provides meals to an employee a benefit in kind charge will arise. Free or subsidised meals provided in a staff canteen may not be chargeable.
An employer should familiarise themselves with the definition of a staff canteen, as in many cases the facilities provided do not meet the requirements of the exemption and a benefit in kind charge should be raised for the meals supplied to an employee.
Where basic meals are provided to employees, an employer can use the following rates, as being a reasonable valuation for meals made available:
This table is intended to be used by establishments that provide meals to clients and customers.
More luxurious food items, such as lobster, steak, caviar etc. should be charged at the cost to the employer to provide these items. The cost to the employer would include the cost of the ‘raw’ material, plus the cost of cooking the item/ items concerned.
There is no longer a 15p per day exemption on the provision of luncheon vouchers. If an employee is provided with such vouchers, their employer should maintain records of the value provided to employees during the course of a tax year and report the benefits provided on a form T9. If these exceed the charging threshold of £400, then the full amount will be subjected to tax.
Employer accounts with food retailers
Some employers now have accounts with food retailers such as sandwich bars and takeaways. Employees are free to pick from the food retailers menu, whilst their employer picks up the cost of the food. The benefit in kind should be raised based on the value of the food items provided.
Waste food stuffs
Food that is left from service or those items destined for the refuse, are still assets of the company and therefore subject to a benefit in kind charge, when provided to an employee.
Free or subsidised meals provided in a staff canteen are not charged as a benefit in kind as long as the following conditions apply:
- the meals must be provided on a reasonable scale. The provision of fine wines, elaborate menus etc. is unreasonable and should be charged as a benefit in kind
- the canteen must not be open to the general public
- all employees should have access to the canteen
This exemption does not apply to hotel and restaurant staff who eat in the public dining room at times when meals are being served to the public.
Reasonable light refreshments such as tea, coffee or water are not subject to a benefit in kind charge as long as they are made available to all staff.
If an employee covers the full cost of the food provided by their employer, then no benefit in kind will arise.
If the employee contributes some way towards the cost of the food, then the employer should record the contribution made by the employee when completing a form T9. The employee in these cases is charged a benefit in kind based on the total value of the meals provided, less the contribution made towards the food.
The employer should record all monies received within their gross profit figure in their accounts.