It is common practice in businesses such as hotels and restaurants for employees to be given free meals. In other commercial situations, employers may provide free or subsidised meals or catering in another form such as drinks from a machine.

Paragraph 10 of Schedule 6 of the VAT Act 1994 specifically refers to the provision of food and drink in the course of catering by an employer to an employee. Where such supplies are made, the value of the supply is the monetary consideration alone, if any, paid by the employee. This has several consequences.

Where an employee pays for a meal, snack or drink, the supply is standard-rated and the value of the supply is the amount paid.

Want to read more?

This content requires a Croner-i Tax and Accounting subscription.

No subscription?

Contact us to discuss your requirements.