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Taxman pounces on swipe-card subsidised staff meals

13 June 2008 by

Caterers have been warned that the tax man is poised to start taxing subsidised staff meals paid for via swipe cards.

The move will concern employers and caterers, who have increasingly turned to swipe cards to make administration simpler and to allow monitoring of consumption.

Roger Williams, partner at Wilkins Kennedy, said: "Swipe cards systems are very common and a highly efficient means of administrating free meals.

"Employers could be hit with a sizable retrospective tax bill if these arrangements are challenged. For employers, replacing these systems will be enormously costly and create a lot of needless red tape."

Wilkins Kennedy issued its warning after the Revenue published a recent statement stating that "employees should treat amounts credited to canteen accounts as earnings for the purposes of PAYE and Class 1 NICs".

Kennedy added: "HMRC's objection seems to be that employees are being given cash to buy food, rather than a token or simply free food itself, but the cash on the swipe card can only be used to purchase meals in the workplace, so the distinction seems a little spurious."

If staff help themselves in work restaurants, or tokens are used for payment, they will still qualify for an exemption.

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By Chris Druce

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