A couple of weeks ago Madgex had a visit from HM Revenue & Customs to review our PAYE tax payments. While in the office they informed us that providing cake on a Friday maybe a taxable benefit. We received this judgement by letter.

“Friday cake The provision of cakes on a Friday is a different matter altogether. As I understand the position, the company provides cakes for all staff generally on a Friday. What is crucial here is that the meal (cakes) is provided to staff generally, its cost is reasonable in scale and in this instance free for staff. As such the provision of the Friday cakes under the circumstance described do not create a chargeable benefit in accordance with Section 317 Income Tax (Earnings and Pensions) Act 2003(ITEPA 2003). I have used the definition of a meal from the Pocket Oxford Dictionary 1972 Reprint as being ‘taking of food’. If I am incorrect in that regard relief will be available under the departments guidance for dealing with trivial benefits. There is no monetary limit to determine what is a trivial benefit. In essence a chargeable benefit will arise on the provision of cakes however, it is deemed trivial because it is perishable and/or consumable.

I am of the opinion that the cakes provided on Fridays to all staff qualifies for relief under Section 317 ITEPA 2003 and also satisfy the trivial benefit criteria. As such the department will not seek to bring that benefit in to charge. Therefore the company can continue to provide cakes to all staff in the same way as the past without the need to declare the benefit or pay any Class 1A National Insurance.”

We are now considering renaming “Cake Friday” to “Section 317 ITEPA 2003 Friday” in thanks of the enlightened decision of Revenue & Customs. Although we were wondering how they could calculate the national insurance tax due for a slice of cake.