Staff canteen for single director company

Staff canteen for single director company

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If a staff canteen, providing food, available to all, is not a benefit in kind, where is the line drawn?

Can a director who is the sole employee of his company claim his lunch everyday? If there is some legislation ruling against this, what is the cut off? One director and spouse?

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By thisistibi
31st Jan 2011 13:22

But there has to be a canteen on the employer's premises

It would seem inefficient to have a whole canteen for 1 person, no?  You might lose more money running the canteen than you save in tax!  Don't ask me what qualifies as a "canteen" though.    All I can tell you is that EIM21671 says:

"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."

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By Cirius di Lemma
31st Jan 2011 13:23

There's no de minimis...

... just follow the law:

Free or subsidised meals must be provided either in a canteen or on the employer's business premises.  They must be provided on a reasonable scale, and they must be provided to all of the employees, or all those at a particular location.

If a third-party caterer is used, the employer needs to contract direct.  Otherwise they're settling a pecuniary liability of the employee (which is then earnings - rather than a benefit - and there isn't an expense deduction provision corresponding to the benefit exemption provision).

See S.317 ITEPA 2003.

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By Cirius di Lemma
31st Jan 2011 13:40

S.317 ITEPA 2003
Workplace meals317  Subsidised meals

[(1)     No liability to income tax arises in respect of the provision for an employee by the employer of free or subsidised meals if they are provided—

(a)     in a canteen, or

(b)     on the employer's business premises,

and conditions A to C [D] are met.]

(2)     Condition A is that the meals are provided on a reasonable scale.

(3)     Condition B is that all the employer's employees or all of them at a particular location may obtain one or both of the following—

(a)     a free or subsidised meal, or

(b)     a free or subsidised meal voucher or token.

(4)     Condition C is that if the meals are provided in the restaurant or dining room of a hotel or a catering or similar business at a time when meals are being served to the public—

(a)     part of the restaurant or dining room is designated for the use of employees only, and

(b)     the meals are taken in that part.

[(4A)     Condition D is that the provision is not pursuant to—

(a)     relevant salary sacrifice arrangements, or

(b)     relevant flexible remuneration arrangements.]

(5)     In this section “free or subsidised meal voucher or token” means a voucher, ticket, pass or other document or token which—

(a)     is intended to enable a person to obtain a meal, and

(b)     is provided to the employee free of charge or for less than the cost of the meals to be obtained by it.

[(5A)     In this section—

“relevant salary sacrifice arrangements” means arrangements (whenever made, whether before or after the employment began) under which the employee gives up the right to receive an amount of general earnings or specific employment income in return for the provision of free or subsidised meals;

“relevant flexible remuneration arrangements” means arrangements (whenever made, whether before or after the employment began) under which the employee and employer agree that the employee is to be provided with free or subsidised meals rather than receive some other description of employment income.]

(6)     In this section “meals” includes light refreshments.

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Nichola Ross Martin
By Nichola Ross Martin
31st Jan 2011 14:36

Nothing too sophisticated required...

The company buys refreshments and makes then available (health and safety etc permitting) at the workplace for the director. As rightly observed above this does not mean that the employer can take you to the local pub for lunch. If you do that it is classed as employee entertainment. Probably in that case the cost would not be a benefit if it could be covered in that case by an annual party/function exemption, but having just seen a PAYE case where the employer got this all wrong, it is possibly not worth it on balance.

I have a tax guide on this topic - go to my site, click on Employers, and then "What expenses can I claim? and then Subsistence...

Virtual tax support for accountants: www.rossmartin.co.uk

 

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By Cirius di Lemma
31st Jan 2011 15:08

I doubt that...

... the odd visit to the local hostelry could fall within the definition of "annual function".  It ain't annual and it ain't a function.

Yet another shameless plug for your drivel-ridden website.

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By naomi2000
31st Jan 2011 16:36

Tiny company canteens

If in doubt, describe the arrangement and ask for a dispensation.

I don't see many old style works canteens these days, but we have quite a few clients situated on out of town estates with limited local facilities who provide a fridge/freezer full of cheap ready meals, a microwave and a "break out corner" and I've not had any problems getting those arrangements covered in the dispensation.

If we're just talking about charging a proportion of the grocery bill to the company, then I don't think there's a clear enough link between expenditure and canteen to justify the concession.

 

 

 

 

 

 

 

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