There is no tax charge for the provision of meals for directors or employees, provided the meal is provided either in a canteen or on the employer’s premises, it’s on a reasonable scale, and it’s available to all employees.
So, does that mean family companies without any employees can pay for lunch out of the business account? Yes! If you’re a sole director without any employees and you work from home or from your office, you can put your shopping for lunch through the company account. The company gets a tax deduction, and the benefit of having the business pay for your lunch is not taxed on you. If you work with your wife or grown-up children, then the whole family can eat tax free!
HMRC’s guidance for tax inspectors says “‘the phrase “on a reasonable scale” should not be interpreted too narrowly. Do not treat the provision for directors as unreasonable simply because it is different from the provision for other staff, even if it is more generous, or better subsidised. In general, you should only assess a benefit in those cases where the provision is clearly unreasonable. For example, where it involves the provision of an elaborate menu, fine wines and cigars. The provision of a glass of wine with an otherwise modest meal is not unreasonable.”
What if you’re not a Company Director? Can the self-employed benefit from this as well? Sadly, no. The self-employed can claim for subsistence in conjunction with business travel, provided that travel is either part of an ‘itinerant’ trade, or outside a normal pattern of travel. As a self-employed employer, you can provide tax exempt work lunches at your premises for your staff, but if you join in yourself, your own lunch will not be tax deductible.