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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Particular benefits: subsidised meals including canteen meals and working lunches

Section 317 ITEPA 2003

If an employer provides free or subsidised meals to its employees or directors there may be relief from tax by exemption or deduction:

  • under the exemption in Section 317 ITEPA 2003 (see EIM21671), or
  • where the meal is part and parcel of the employee or director travelling on qualifying business travel, or
  • where the employee’s or director’s meal is part of business entertaining for which there is a matching deduction under Section 336 ITEPA 2003.

If none of these apply then, for employees and directors (except for 2015/16 and earlier those in an excluded employment (see EIM20007)), a benefits charge will arise. The cash equivalent of the benefit is the amount of the expense (see EIM21102) incurred by the employer, or other provider of the meal, in connection with the provision of the meal.

The exemption applies to light refreshments as it does to meals.

The exemption applies only to employees of the employer that provides the meal which excludes employees working for a third party employer (e.g. workers contracted to Employer A who work at a site where Employer B provides the meal) from this exemption. This anomaly was removed with effect from 14 December 2004 when regulations were laid under the powers in Section 210 ITEPA 2003 (power to exempt minor benefits) to ensure that all employees who enjoyed a meal under the same circumstances could gain from this exemption, regardless of whether their employer or another employer provided the meal.