11/06/2026
No such thing as a (tax) free lunch? 🥪
You run a small company and treat staff to lunch in the office. You're told it’s a taxable benefit in kind because staff lunches are only exempt if they are provided in a workplace canteen. Is this correct?
Whilst it's true that free or subsidised meals at a workplace canteen are exempt from income tax and NI, that's not the full story. You'd be forgiven for thinking that it was as simple as canteen = yes, everything else = no, because on GOV.UK under the heading “What’s exempt” it only mentions canteens and vouchers to use in a canteen.
However, there is another way to provide your employees with a tax-free meal.
The legislation states that the exemption applies to free or subsidised meals if they are provided:
in a canteen; OR on the employer’s business premises.
So, lunches served up in the office are also exempt. It would be unfair if the exemption was limited to businesses that could afford to pay for a canteen.
There are other conditions to meet to qualify for the exemption.
If meals are served on your business premises, conditions A and B below must be met.
Condition A. Meals provided are on a reasonable scale. E.g. A modest meal with a glass of wine is perfectly acceptable.
Condition B. All employees or all of them at a particular location, e.g. a certain branch office, may obtain a free OR subsidised meal and/or a free or subsidised meal voucher or token.
It’s not necessary for all employees to receive this, just that they are offered them. The exemption won’t apply if the meals are provided as part of salary sacrifice or flexible remuneration packages.
Meals that don’t meet the conditions for exemption, e.g. because they are not available to all employees, including directors, are taxable benefits.
Although all staff need to be able to obtain a free meal for the exemption to apply, they don’t need to have the same meal or same standard of meal.
