If you issue employees with any kind of staff clothing, uniform, or workwear essential for their work, and it is clearly identified with a company logo, both you and your employees may enjoy tax benefits.
HMRC provides strict guidelines on what qualifies as workwear. So it’s essential to make sure the clothing meets their criteria before making any claims for a uniform tax rebate.
In this guide to uniform tax, we explain the criteria for tax-deductible staff clothing and workwear. We discuss the type of tax deductions that are available, and how your business and your employees can claim them.
HMRC’s Uniform Tax Definition
This is HMRC’s definition of a uniform that qualifies for tax rebates:
“A deduction can be permitted for clothing that is recognizably a uniform or part of a uniform. This can be where the employee is required by his or her duties, to wear it and must bear the cost of it.
A uniform in this context means a set of clothing of a specialized nature that is recognizable as a uniform and is intended to identify its wearer as having a particular occupation.”
“Fixing a permanent and conspicuous badge to what would otherwise be ordinary clothing may be enough to make it a uniform, but each case must be considered on its merits.
The essential test is whether the employee would readily be recognized as wearing a uniform by the person in the street. A detachable badge is not sufficient to make the clothing to which it is attached part of a uniform.”
Although HMRC quotes police or nursing outfits as examples of recognizable uniforms, the tax benefits are not limited to specific uniforms.
Workwear for carpenters, builders, mechanics, and plumbers, for example, qualifies for tax uniform tax rebates.
Staff working in stores or delivering goods may be required to wear specific, identifiable clothing such as polo shirts or hi-viz jackets with the company logo.
In that context, staff clothing refers to garments that an employee is required to wear to carry out their duties within work hours. HMRC also stresses that these garments can only qualify for uniform tax rebates if they are wholly and exclusively for business purposes.
You may be able to claim tax relief on the cost of:
Cleaning, repairing, or replacing specialist clothing (for example, a uniform or safety boots)
You cannot claim relief on the initial cost of buying clothing for work.
Uniform Tax Exclusions
Although HMRC is very specific about the types of uniform or workwear that qualify for treatment under uniform tax, a number of cases have ended up in court as there are grey areas within HMRC’s definition.
However, there are clear examples that will not meet HMRC’s criteria. For example, if an employee is required to wear clothing in a specific colour, such as a blue shirt or dress matching corporate colours, that would not qualify.
If an employee only wears a suit or tie at work, that would not meet HMRC’s criteria. If builders working for a company wear their own unbranded clothing on-site, they cannot claim for cleaning, repairing or replacing it.
Implications of uniform tax for employers
If you provide staff clothing, uniforms, or workwear to your employees, you have a number of tax, National Insurance, and reporting obligations related to the expenditure.
You won’t have to pay Corporation Tax or make National Insurance Contributions, although you may be able to claim tax relief in the form of allowable business expenditure.
You must report any expenditure made by the business if you purchase, lend, clean, or repair qualifying staff clothing to HMRC. Use form P11D to report the expenditure as benefits to the employee.
However, if employees buy their own qualifying staff clothing and you reimburse them, your expenditure is covered by an HMRC exemption and you do not have to report it.
If you reimburse employees who pay, clean, repair, or replace their qualifying staff clothing, you must deduct PAYE tax and Class 1 National Insurance contributions as a benefit to the employee.
If you have any questions contact our friendly team here.
Click here to download and print form P11D.
