Pre-Budget Report: Salary Sacrifice and Workplace Canteens

Where employers have implemented a salary sacrifice scheme which allows employees to reduce their salary in return for free meals being provided by their employer, there was a considerable tax saving to be realised by the employer and employee as the cost of the meals would effectively be tax and NI free.

From 6th April 2011, the tax exemption for workplace canteens will be removed where the canteen is provided in conjunction with a salary sacrifice scheme.

Comment: If employers operate salary sacrifice schemes along with workplace canteens or subsidised meals then these arrangements will need to be reviewed as they will become less tax efficient from 6th April 2010.