Emily Coltman of FreeAgent explains some of the ins and outs of claiming for the clothing you wear for your business.
Most people need to wear clothes for work, whether it’s jeans and shirts, smart suits or – in the case of some home-based freelancers – even a set of comfy pyjamas.
But is tax relief available on the cost of that clothing and, if so, how much can you claim?
Emily Coltman FCA, Chief Accountant to FreeAgent – who provides the UK’s market-leading online accounting system specifically designed for small businesses and freelancers – explains some of the ins and outs of claiming for the clothing you wear for your business.
HMRC has set rules for what kind of work clothing you can claim tax relief on, so before you make a claim, you’ll need to evaluate exactly what the clothing is, and why it was bought.
1) Protective clothing
Do you work on a building site, or railway line, and need protective clothing such as overalls, steel toe-capped boots or a high-visibility jacket?
If so, it is absolutely fine to claim tax relief on those items of clothing – and if you’re an employee and your employer buys them for you, there’s no taxable benefit.
The same applies to some uniforms. HMRC’s description is “a recognisable uniform that shows you’ve got a certain sort of job – like a nurse’s or police uniform”. So if you wear something like that to work, tax relief is available on the cost of it.
3) Flat rate deductions for certain trades
If you have to buy specialist tools or clothing, and you’re in certain trades, then rather than claiming tax relief on the actual cost of the tools or clothes you bought, you can claim a flat rate annual deduction to allow for that spend. However, you can’t have both; it’s either what you actually spent, or the flat rate deduction.
Here’s the table of industries, occupations and their annual deductions.
4) “Ordinary” clothing: “everyday wardrobe”.
There is no tax relief available for “ordinary clothing” that can be worn for work or for elsewhere, if that clothing is part of your “everyday wardrobe”.
So if you buy a pair of pyjamas, and wear them when you’re working from home but also when you’re in bed at night, you can’t claim tax relief.
That also holds true for more “conventional” work clothing. There was a headline case where a computer engineer, required to wear a suit and tie for work, tried to claim tax relief on the cost of that suit and tie – and wasn’t allowed to.
The argument is that the computer engineer could have worn that suit and tie elsewhere, for example to go out for dinner, attend a wedding or go to an event requiring smart clothes. HMRC says that “if the clothing might suitably be worn as part of a hypothetical person’s ‘everyday’ wardrobe”, no tax relief is available.
5) Where the “everyday wardrobe” does not apply: actors and other entertainers
Actors and other entertainers often have to buy costumes for a part. For example, if you are a celebrity impersonator, you’ll need to wear very specific clothes and you may wonder if you could claim tax relief on those outfits.
The answer is yes.
Tax relief is available on costumes, even if they could afterwards be worn as ordinary daytime clothing. HMRC make this clear and give an example of a self-employed television interviewer who may claim for the cost of his suit worn on TV, because that’s part of his “costume”, while the architect he’s interviewing – who is wearing an identical suit – wouldn’t be able to claim tax relief on the cost of his clothing because it is classed as part of his “everyday wardrobe”!
Remember there are many complicated tax rules and regulations surrounding business clothing, so if you are not 100% sure about what you can claim, you should speak to an accountant who will be able to advise you.
*Emily Coltman FCA is Chief Accountant to FreeAgent, who provide the UK’s market-leading online accounting system specifically designed for small businesses and freelancers. Try it for free at www.freeagent.com