Andrew Needham looks at the VAT consequences of providing free meals and other perks to staff.
If a business provides a canteen for staff, VAT is due on what the business actually charges for the meals, etc. If a business charges the market rate, VAT would be due in the normal way.
However, if a business provides subsidised or free meals to staff, VAT is still only due on the actual monies received. This means that no VAT is due on catering supplied free to staff and is only due on what the staff actually pay for a subsidised meal.
Even if catering is provided free to staff, any associated input tax is fully recoverable (assuming the employer is not partially exempt) as a legitimate business expense.
Where employees pay for meals and so on under a salary sacrifice arrangement, following the judgment of the CJEU in Astra Zeneca (Case C-40/09), employers must account for VAT on the