HMRC have published some questions and answers for employers about the new rules in respect of salary sacrifice for canteen arrangements which are effective from 6 April 2011.

Some employers have put in place arrangements that combine salary sacrifice or flexible remuneration arrangements with the provision of meals at the workplace, typically in a staff canteen.

These arrangements seek to make use of the exemption in section 317 Income Tax (Earnings and Pensions) Act 2003 (“ITEPA 2003”) for free and subsidised meals provided in a canteen or on the employer's business premises, subject to the satisfaction of certain conditions.

As a result of section 60 Finance Act 2010, with effect from 6 April 2011 the section 317 exemption is prevented from applying to meals which are provided as part of salary sacrifice or flexible remuneration arrangements.

However, HMRC has been challenging some existing and prospective canteen salary sacrifice schemes on technical grounds. The new legislation does not affect existing compliance efforts or change HMRC's view that such arrangements are not effective.

For more information go to http://www.hmrc.gov.uk/specialist/salsac-canteen.pdf