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HMRC internal manual

Employment Income Manual

Particular benefits: subsidised meals: canteen meals

Section 317 ITEPA 2003, section 60 FA 2010

There is no tax charge on the provision of meals for directors or employees if the meal is provided in a canteen or on the employer’s premises and the following conditions are met:

* the meal is on a reasonable scale and
* all employees, or all employees at a particular work location, may obtain a free or subsidised meal (or a voucher for one); and
* in the case of a hotel, catering or similar business, if free or subsidised meals are provided for employees in a restaurant or dining room when meals are being served to the public, part of the dining area must be designated for staff use only and the meals must be taken in that part, and
* with effect from 6 April 2011, the meals are not provided as part of salary sacrifice or flexible remuneration arrangements. (But see [EIM21675]( for details of canteen arrangements that are already taxable prior to 6 April 2011).

For further information about how the exemption is prevented from applying with effect from 6 April 2011 where free or cheap meals are provided as part of salary sacrifice or flexible remuneration arrangements, see EIM21676 onwards.

The phrase “on a reasonable scale” (Section 317(2) ITEPA 2003) should not be interpreted too narrowly. Do not treat the provision for directors as unreasonable simply because it is different from the provision for other staff, even if it is more generous, or better subsidised. In general, you should only assess a benefit in those cases where the provision is clearly unreasonable. For example, where it involves the provision of an elaborate menu, fine wines and cigars. The provision of a glass of wine with an otherwise modest meal is not unreasonable.

Note that the exemption applies to meals provided in any canteen. The canteen does not necessarily have to be on the employer’s premises, or restricted to the employees of one employer. For example, on an industrial estate there may be a single canteen serving the employees of all employers on the estate. Meals provided in that canteen are within the exemption as long as they are available to all employees of the employers concerned.

Note also that there is no need for all the employees to get the same level of subsidy for their meal. Provided a free or subsidised meal is available to all employees, the exemption applies.

The word “canteen” has its ordinary meaning. A restaurant, cafe, public house or similar establishment which serves meals to the public at large is not a canteen.

The exemption also applies to a meal provided to an employee by a third party, if the employee is working at the premises of the third party. For example, a contract worker employed by A, who works on site at employer B, is exempt from a benefits charge if he enjoys a meal in a canteen provided by employer B for its employees.

For further information on the exemption in Section 317 ITEPA 2003 see EIM21672.