Watch those goodwill working lunch gestures – Don’t be caught out!

Many employers overlook the possible tax consequences of ‘the working lunch’ gestures and this could result in them having to explain themselves to the Tax Authorities. As this, so called, goodwill gesture, is not open to all employees the exemption for subsidised meals does not apply and a tax charge will arise on the benefit. As it was never the intention of the employer to have the employees absorb a tax bill for the occasional lunch, it is therefore advisable that the employer settle the liability by means of a PAYE Settlement Agreement. This tax implication can be easily overlooked and HMRC knows this and often times look for it in a PAYE visit.