Canteens and workplace meals

Produced by Tolley in association with Philip Rutherford

The following Employment Tax guidance note Produced by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Canteens and workplace meals
  • Introduction
  • Canteen meals
  • Meal vouchers
  • Vouchers exchangeable for cash or cash provided to cover meals
  • Employee accounts
  • Other meals provided to staff
  • Business meetings
  • Reporting requirements

Canteens and workplace meals


A large number of employers will provide canteen or meal facilities for their staff. The provision of this benefit can take a number of forms, including through subsidised canteens, meal vouchers or free meals. Additionally, some employers provide lunch allowances in the form of cash allowance.

Depending on the circumstances of the benefit, it will attract a different range of PAYE, NIC and reporting requirements. Employers enjoy a large number of exemptions from the charge to tax and will be discussed in this guidance note.

Canteen meals

Canteen meals enjoy a total exemption from tax, NIC and reporting if a number of requirements are met. These are found in ITEPA 2003, s 317 and include:

  1. the meals should be in a canteen

  2. on the employer’s business premises

  3. not provided as part of a salary sacrifice arrangement

Therefore, an employer can provide meals offsite as long as the first requirement is met. HMRC defines a canteen as something which is not a restaurant, public house or café. It will generally be clear what constitutes a canteen, particularly when it is onsite. If there is any doubt as to whether an offsite premise constitutes a canteen, approach HMRC for a pragmatic resolution. Employers can approach their Customer Relationship Manager or Customer Coordinator in the case of larger employers or their local PAYE Office in other cases and discuss their individual circumstances.

In practice a group of employers on a trading estate may group together to pay for a canteen for all of their employees. In this instance, all of the employees would be able to benefit from the exemption.

The exemption applies equally to the provision of free or subsidised meals as it does to vouchers which achieve the same result.

An employer cannot provide meals that are not on a reasonable scale, such as particularly lavish meals as this would be considered staff entertaining. HMRC will take a dim view of overly lavish restaurant facilities which might be provided

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