Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.
Do meals count as a benefit?
As far as HMRC is concerned, if you provide meals for your employees, these may count as a benefit to your staff and might need to be reported to HMRC and additional tax and National Insurance paid on them. Whether you need to report and pay all depends on the circumstances in which you are providing the meals.
What you will report and pay will depend on the value of the meals, whether they are taken on or off your work premises, if they are provided through a work canteen which is available to all employees and how the meals are paid for by your employees or directors.
Are there any exemptions?
If you offer all of your employees free or subsidised meals at a workplace canteen and they are paid for by vouchers which you give to your employees and cover the cost of the meals then you don’t need to report these to HMRC and there would be no additional tax or National Insurance to pay. HMRC states that these meals have to be of a reasonable value. By reasonable value, HMRC mean that the meal shouldn’t be overly extravagant or expensive – so no champagne and truffles, just the kind of meals you would expect to get in a workplace canteen.
If these meals or food vouchers are offered as part of a salary sacrifice arrangement then you will need to report them to HMRC as they won’t be classed as exempt.
How do you report and pay?
If you are providing meals or vouchers which aren’t classed as exempt, as detailed above, then you need to report these to HMRC and you may need to deduct additional PAYE tax and National Insurance on the cost of these meals.
The following free or subsidised meals aren’t classed as exempt, according to HMRC rules:
- Meals that aren’t classed as reasonable, so this would include meals which are elaborate or fancy or are accompanied by fine, expensive wines
- Meals which are provided off-site but not at a canteen, for example, in a restaurant
- Meals which aren’t available to all staff members – so if they are only available for company directors then they won’t be exempt
- Meals provided as part of salary sacrifice arrangement.
These meals need to be reported to HMRC on your P11D form and you will need to pay Class 1A National Insurance on the cost of the meals to you.
If you provide vouchers for meals taken outside the workplace then you need to report this to HMRC on your P11D and deduct and pay Class 1 National Insurance through payroll on the value of the vouchers.
The following methods of providing meals are classed by HMRC as earnings and will need to be treated accordingly:
- Cash allowances for meals
- Vouchers which the employee can exchange for either food or cash
- Top-up payments made to an employee’s account for food and drink and which use a card or PIN system.
If you provide meals for your employees using any of these methods then you need to add the amount you give to your employee to their other earnings and then you need to deduct PAYE tax and National Insurance through payroll, just as you do for their other earnings.
If these meal costs are provided as part of a salary sacrifice scheme and the mount of salary given up is greater than the cost of the meals, you need to report the salary amount to HMRC. This only applies to salary sacrifice arrangements made after 6th April 2017.
How can DSR Tax Claims help?
We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.