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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Particular benefits: subsidised meals on the employer's premises or in a canteen: examples

Section 317 ITEPA 2003

These examples show how the exemption in Section 317 ITEPA 2003 (see EIM21670) works in practice.

Example 1

A manufacturing company located in a small town has 150 employees. 125 of these work at a factory on an industrial estate in the middle of the town. There is a subsidised canteen next to the factory where all the employees can get a subsidised meal. The other 25 employees work in an office 2 miles out of town. They can go to the subsidised canteen if they wish but not many do so. Occasionally the office staff have a working lunch in the office. The employees at the factory never attend the working lunches.

Section 317 applies because even though not all the 150 employees do actually have subsidised meals in the canteen, they all can do if they wish. Because Section 317 applies, the working lunches are exempt even though the factory employees do not attend them.

Example 2

A large national PLC has thousands of employees working at many sites around the country. At some of the sites there are canteens subsidised by the employer. At others there is no canteen. The canteens will admit any employee of the PLC, whether they work at that canteen’s site or not. Most of the employees getting subsidised meals at any one canteen work at that site, but occasionally employees from other sites eat there. The employees at sites without canteens do not get meal vouchers. Occasionally some employees meet for a working lunch which is on a reasonable scale.

Section 317 applies. Even though the employees at sites without canteens do not get meal vouchers, they have the opportunity to get a subsidised meal if they visit one of the sites with a canteen. So all employees may get a free or subsidised meal. Because Section 317 applies, the working lunches on the employer’s premises are also exempt.

Example 3

A small company has three directors and two employees. Twice a week they all have a working lunch together in the office at which they brainstorm new ideas. The lunch is on a reasonable scale and paid for by the company. Every second Friday they go to the pub at lunchtime to discuss over a pub meal how the business is developing. The meals and drinks are paid for with a company cheque.

Section 317 applies to the working lunches in the office because all the employees may get a free meal on the employer’s premises. But Section 317 does not apply to the pub meals. They are not on the employer’s premises or in a canteen where meals are provided for staff generally.

The company decides to employ a security guard. He is not invited to the twice weekly lunches. Section 317 no longer applies because not every employee of the company may get a free or subsidised meal.

The company decides to give the security guard free meal vouchers. He uses these to get a sit down lunch at a local chip shop. Section 317 now applies to the working lunches because all the employees of the company either may get a free or subsidised lunch or do get meal vouchers. Section 317 does not apply to the security guard’s meal vouchers because these are not used to get a meal on the employer’s premises or in a staff canteen.

With effect from 6 April 2011, the exemption is prevented from applying where meals are provided in conjunction with salary sacrifice or flexible remuneration arrangements (see EIM21676 onwards).