Revamped workplace meals clause published

HMRC have published draft legislation on the change to the tax set-up of work canteens.

This follows the announcement in last year's pre-Budget report to restrict the exemption for free or subsidised meals where an employee has an entitlement in conjunction with salary sacrifice or flexible benefits arrangements.

The draft clause will amend ITEPA 2003, s 317 and will have an effect on or after 6 April 2011. It shall remove the tax exemption in circumstances where workers are in effect using a designated amount of their gross remuneration to fund the purchase of food and drink at work.

Subsidy benefits that are quantifiable but not connected to salary sacrifice or flexible benefits arrangements will not be affected.

Two new subsections will have take effect, applying equally to salary sacrifice and flexible benefits remuneration arrangements entered into before, on and after 6 April 2011: (4A)(a) will prevent the exemption from applying where the provision of free or subsidised meals is linked to a salary sacrifice arrangement in which the employee has agreed to reduce their existing taxable employment income and is to be provided in return with food and drink (or the means of obtaining it).

And subsection (4A)(b) will prevent the exemption from applying where the provision of free or subsidised meals is linked to a flexible benefits remuneration arrangement in which the employee and employer have agreed that part of the reward for that employment will be provided as food and drink (or the means of obtaining it) rather than some other form of employment reward that the employee could have received instead.
 

Issue: 4242 / Categories: News , Income Tax