An employer may provide subsidised or free meals for its staff tax-free. Employer subsidised meals must be:
– Available to all staff.
– Made available either at a canteen or on the employer’s premises.
‘Meals’, include light refreshments.
‘Available to all staff’ means available to all staff who work at any particular workplace.
– Meals may be provided by trolley service rather than from a kitchen in the workplace.
– Relief does not apply if any staff are excluded. For example, there would be no relief for meals provided in an exclusive director only dining room.
This tax relief is separate to and independent of the tax relief for Staff parties & Annual Functions or for Subsistence, claimed as part of business travel.
If the qualifying conditions for subsidised meals are not met, it may be possible to claim relief under the Staff Parties provisions, otherwise, the meals will be taxable benefits of employment and reported on form P11D.
Practicalities
– It is possible for a one-person company to claim the relief.
– If all employees have to work from home, it is possible that the relief can apply per employee per home workplace.
For example, in the case of a one-person company, where the director works at home:
– An agreement is made to provide staff lunch.
– The company may then reimburse the director’s costs of lunch.
– The director is expected to retain receipts and complete an expense claim form in respect of the expenses (on an actual basis).
– Provided that these costs are reasonable and are paid in accordance with the legislation, the expense may potentially be agreed as a Flat-rate allowance with HMRC.
– It is advised to write into the employer’s PAYE office in order for HMRC to formally approve the flat rate to be reimbursed.
– If a flat-rate allowance is approved this reduces record keeping requirements.
– If HMRC does not approve the arrangement and the director in this example has failed to claim the actual amount spent, or does not have receipts to back it up, it is most probable that HMRC would raise a PAYE assessment on the employer.
Alternatively, a company and director may have an agreement that the director charges the company rent for use of home as a workplace.
– The provision of subsidised meals may be an additional service that is incorporated into that home working rental agreement at a fixed weekly cost.
– The director will be required to declare rental income and claim back expenses under Self Assessment.
Restrictions
Directors and employees who receive rent or an allowance for Working from home may not claim the £1,000 Trading & Property Allowance due to the restriction that the allowance cannot be claimed if any payment is received by an individual’s employer (or the employer of their spouse or partner).
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