Are team-building lunches a taxable benefit in kind?

Are team-building lunches a taxable benefit in...

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We would like to offer our team-leaders to take their teams out to lunch perhaps once a quarter during work time for a team-building lunch.  These lunches would only be available to the people within each team, although all teams would be encouraged to organise them.   I am investigating the situation regarding tax and benefits in kind on this.   HMRC manual EIM01220 sets out a tax exemption for work related training, defined as any "training course or other activity which is designed to impart, instil, improve or reinforce any knowledge, skills, or personal qualities which are, or are likely to prove, useful to the employee when performing his/her duties or which will qualify or better qualify the employee to undertake the employment, or to participate in charitable or voluntary activities arising through the employment."  Would team-building lunches as described above be covered by this definition? 

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Portia profile image
By Portia Nina Levin
28th Oct 2015 13:49

How is taking lunch together an activity designed to any of those things?

In what way exactly will the lunch be designed to achieve team building?

Getting rat-arsed together over a curry is not going to make them love each other any more or any less really, is it?

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By katieq
28th Oct 2015 13:56

No indeed not.   I just

No indeed not.   I just wondered, as I had been advised that such off-site team-bonding meals could be covered.  I would not expect our people to be getting get rat arsed over a curry at lunch time - I think we're slightly more professional than that.       Any helpful comments would be appreciated.

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Stepurhan
By stepurhan
28th Oct 2015 14:00

It was helpful

Whilst acerbic, the comment was helpful. You need to be able to answer the first two questions Portia has posed. How is "team-bonding" different from simple staff entertainment? (with its annual per head limit)

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By katieq
28th Oct 2015 14:09

I thought in order to qualify for the annual limit per head, each event had to be open to all staff.  Could a series of separate team lunches be included under the £150 per head limit?  Is it enough that all staff have the opportunity to attend their own lunch and no-one elses provided that each team holds a lunch?  They are really intended as the opportunity to get together in an informal pressure-free environment where conversations (work related or otherwise) that may not happen at work can take place.  The intention is that this would make for a better working relationship within the teams because members would know each other better and on a different level than is possible in the normal workplace environment.   We are a software development company, and a number of our programmers are heads-down, not-to-be interrupted types which makes interaction with them outside of the workplace easier at times.    Thanks for any advice  

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Portia profile image
By Portia Nina Levin
28th Oct 2015 14:20

The £150 limit is for ANNUAL

The £150 limit is for ANNUAL functions, not QUARTERLY functions.

You have a taxable benefit that needs to be dealt with PSA, or somebody needs to get off their [***] and DESIGN an activity (where lunch might incidentally need to be taken) that fulfils the requisites of work-related training.

The alternative would be to have lunch brought into the workplace, and have a "working lunch" for each of the teams, which could then be made to satisfy the conditions of the workplace canteens exemption.

I do not know where you are receiving your faulty advice from.

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By ireallyshouldknowthisbut
28th Oct 2015 15:16

.

I have always been inclined to include such lunches on the basis that there is clear business purpose to these things, in that it does very much help to get people together, outside of work and make 'em talk to each other.   

I have never found HMRC take too much interest unless they are clearly extravagant affairs and a 'perk'.

Keep them lunch time, keep them cheap and put 'em through. I would call them "team meeting" in all the paperwork and add a topic to the invites too to think about and contribute, that way you can - if questioned - point out these are not jollies and meet some of the criteria listed in the manual you have listed. 

**Edited** for misleading comment over Annual Event that came out wrong. 

 

 

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By katieq
28th Oct 2015 14:23

It was just a question - I thought that was what this forum was supposed to be all about. 

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By katieq
28th Oct 2015 14:24

Thankyou ireallyshouldknowthisbut - that was useful advice -

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By ireallyshouldknowthisbut
28th Oct 2015 14:24

.

@katie, dont worry about Portia, fantastic tax knowledge.  Rather abrasive. Dont take it personally. She will be ripping into my post as I type.... 

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Portia profile image
By Portia Nina Levin
28th Oct 2015 14:30

Correction. I now know where you are getting your faulty advice from.

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Stepurhan
By stepurhan
28th Oct 2015 14:35

Lack of clarity

Just to be clear, the staff entertaining does not solely apply to a single annual event. It could be several annual events, provided the total cost of all annual events is under £150 per head. It is also possible to have separate annual parties for different sections, though all staff have to have an equivalent event for any particular event to qualify.

See HMRC guidance for now. Anyone wanting to follow through to statute is welcome to do so.

But I will acknowledge that quarterly meetings are unlikely to qualify as annual events. (Though could you be said to be having four annual events?) I confess I hadn't thought it through that far though, simply wishing to point out that the events sounded like staff entertaining to me.

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By katieq
28th Oct 2015 14:41

I thought the £150 per head

I thought the £150 per head can cover multiple events, provided each event is just held once a year and each is open to all staff.    (Just waiting for the ricochet of the gunfire... )   Thank for your advice stepurhan, but I had already discounted including them in our £150 limit before your suggestion.  Our team luches would be totally different to those events - just an opportunity to get off site with your team into an informal atmosphere, which we hoped would reap rewards in terms of working relationships.  They would be limited to the lunch hour and also in terms of expense so lobster and caviar would be off the menu.    

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