According to HMRC, for a garment to qualify as a uniform, either the individual wearing it should be recognisable as belonging to a particular occupation or the garments should carry a conspicuous badge or logo to promote a brand. Importantly, the badge or logo should be permanently attached to the garment or else HMRC could argue that the garment is not really a uniform.
Items of clothing are considered individually by HMRC. If an employer supplies a branded top and ordinary trousers as part of what it wants its staff to wear, even if this might be what the employer considers to be the overall ‘uniform’, from HMRC’s perspective, only the branded top will qualify as a uniform for tax purposes. The provision of the trousers would create a benefit in kind, on which tax is payable by the employee.
Other items that employers might commonly supply to employees could include protective clothing such as gloves, goggles, protective boots and overalls. Here, an employer can claim full tax relief for the cost where genuine protective clothing is needed and there is no taxable benefit to the employee. Note: if the employer provides clothing to be worn under the protective clothing, this is not usually allowed as
a tax-free benefit.
If the item has been accepted by HMRC, then it follows that the employer can claim tax relief for the costs of maintaining and/or cleaning these items; this will not create a benefit in kind for the employee.
Where the employer provides items of uniform or protective clothing and/or cleans or maintains them, they will be covered by an exemption and there is nothing to report.
Where an employer provides non-exempt items, there may be tax consequences, depending on whether or not the employer has loaned the employee the items or given them.
If the employer gives the employee clothing they can keep, the employer must report this on a P11D as a benefit. The amount to report will be whichever is higher: the initial cost of the clothing to the employer, or the value of the clothing when it is given. The employee will pay tax on the benefit, and the employer will pay Class 1A National Insurance.
Where an employer provides non-exempt items, there may be tax consequences
If the employer loans the employee clothing, the benefit will be assessed on the higher of 20 per cent of the market value of the clothing, or the annual rental paid for the clothing. Again, this would go on a P11D and Class 1A National Insurance should be paid by the employer.
If an employee is required to supply their own uniform, or they have to buy branded items of clothing from the employer, they will be entitled to claim tax relief for the cost of the uniform. Again, this relief applies strictly to qualifying uniform items only; there is no tax relief when clothing can be worn both for work and causally.
If the employee incurs costs cleaning or maintaining their uniform or protective clothing, they can claim tax relief for the reasonable cost of doing so. There are various flat rate expenses that can be claimed, details of which can be found on HMRC’s website at www.gov.uk/guidance/job-expenses-for-uniforms-work-clothing-and-tools. The amounts vary by job or profession. For example, under the category ‘laboratory staff, pharmacists and pharmacy assistants’, staff can claim £80 off their tax bill.
Importantly, employers who require their employees to purchase specific items of clothing need to take care that this doesn’t result in the employee being paid less than the National Minimum/Living Wage. The definition of a uniform for the National Minimum/Living Wage is not the same as for tax purposes and if employers are taking deductions from their employees or requiring them to purchase specific items of clothing to do the job, they need to check if such costs could reduce staff pay to below the legal minimum.
Providing uniforms to employees can be of great benefit to both employer and employee alike. While an employer can do whatever it wants in terms of providing uniforms, it must follow the rules carefully if it wants to write off tax against the items it provides.