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Introduction
Can you claim work clothing or business clothing as a genuine business expense while UK contracting? In addition, when you are a limited company contractor, when are work clothes tax-deductible? Let us investigate contractor clothing more closely and find out when can you claim tax back on work clothes (UK)? If you are looking to claim business clothing through your contractor limited company or small business, can you write off clothes for work? In this article, we will look at some examples of questions in respect of a sole trader or contracting limited company clothing expense with regard to when can I claim for work clothes.
Initial thoughts
Questions around are work clothes tax-deductible
There are various questions around when is work clothing tax-deductible which will arise from different types of UK contractors and small business owners. While UK contracting or trading in general, some examples of such questions are:
- Can I buy clothes through my business?
- Can I claim clothing for work and when will I receive a work clothes deduction?
- Can I buy a suit through my company?
- Are work shoes tax-deductible?
- Is workwear clothing for builders allowable for tax?
Therefore, we will investigate in which scenarios when can you claim clothing as a business expense and when will you receive tax relief on work clothes.
Tax-deductible work clothing -what to consider
Whether a sole trader or running your own company, you will almost certainly buy clothes to wear for work. This could be office clothes such as a suit, work trousers, smart work clothes and formal clothing or alternatively it could be overalls or protective clothing, etc. Therefore, when can you claim contractor clothing and business clothing as part of your business expenses and will you receive a work clothes tax deduction? As this is a grey area, we will look at when clothing is tax-deductible.
As a UK contractor, you may be able to claim for work clothes, and please read on to see if you can do. However, in many instances, two expenses are often missed by limited company contractors and small business owners alike. These are Trivial Benefits and the Annual Event (Christmas Party). What’s more, there are also specific rules to follow if you plan to make company donations or give business gifts.
Is the clothing part of an everyday wardrobe
We should think about everyday clothing when we look at whether can you claim tax back on work clothes. If your clothing is a genuine business expense, you will receive a work clothes tax deduction.
When we look at contractor clothing and when clothes for work are tax-deductible, HM Revenue & Customs (HMRC) take their basic rule from the case of a lady barrister. She tried to claim tax relief on the dark suits that she bought to wear for court appearances. HMRC did not let her claim the tax relief. This is because she could have worn those suits on occasions that did not relate to her work. In addition, a further reason was that the rules say that clothing, by definition, has a `dual purpose.’
Therefore, any clothing that is, or could be, part of an “everyday wardrobe” is not tax-deductible.
Are work clothes tax-deductible -4 main areas to consider
When we consider are work clothing tax-deductible, the following four points are some clothing that HMRC says are specifically allowable.
Are the business clothes part of a work uniform
As part of your role, if your employer or client requires you to wear a uniform, the cost of this will be tax-deductible. Furthermore, when you wear a work uniform, it clearly shows what you do. In this case, you can claim clothing as a business expense and claim back uniform tax. When you complete your annual tax return you can claim uniform tax as part of the employment section. As a result, will receive uniform tax relief as either a deduction in your tax bill or part of your tax code.
An example of a work uniform is that of a uniform for a self-employed nurse. In this scenario the nurse can claim a uniform tax rebate (UK). You cannot, however, claim tax relief on any clothing other than your uniforms, such as shoes or undergarments.
In addition, please take note that when you are working for yourself, there can also be uniform benefits. If your customers recognise you in your work uniform, this may help generate other future sales for your business.
Forms of protective clothing
In considering when are work clothes tax-deductible, we now turn to protective-type clothing and we will consider is workwear tax-deductible. If you need to wear chemical protective workwear or other specialised clothing as part of your day-to-day work, you are allowed to claim the cost of this. This could be workwear protective clothing for builders or other construction or industry type jobs. In addition to builders work clothes, you can also claim for any personal protective equipment that you also need as part of your job.
Protective clothing is designed to keep you safe, while you work in your chosen environment. For example, if you are a self-employed builder and you buy a helmet and protective footwear to wear while working on-site.
You may ask yourself can I buy a suit through my limited company? The simple answer here is you cannot claim for other clothing such as trousers and a shirt or pencil skirts as those will be part of your everyday wardrobe. It is only the workwear protective clothing itself that you can claim as expenses.
Costumes for entertainers
When considering if we can claim for business clothing, if you are a musician, actor, or another type of entertainer, you may buy clothes that are a costume. They could be “acquired for a stage, film or TV performance.” In this case, you can claim tax relief on these.
Wearing an evening dress/outfit for work
When looking at are work clothes tax-deductible, HMRC gives the example of a waiter. He has to wear evening dress, including a tailcoat, for work. In this case, this is not part of an `everyday wardrobe’; therefore, he can claim this.
Please be careful in this area. The cost of buying or hiring evening dress for a business function such as an awards ceremony would not receive tax relief. This difference is because attending these functions is unnecessary for you to do your job. Compare this to the waiter serving you; it is a key part of his job.
Summary for UK contractors
Are work clothes tax-deductible -when your work clothing is tax-deductible
After you consider the above, if you can claim for work clothes and they are tax-deductible, you can also claim for repairing or replacing these as and when the need arises.
When you are claiming for work clothes during the tax year, you should obtain a receipt for it. Nowadays, many retailers will ask you for your email address. Once you give this to them, they will email the receipt to you to save on paper.
Are work clothes tax-deductible -claim tax relief for work clothing
If you own your own company and your clothing is allowable under the above guidelines, you can claim these as an expense through your company. As a result, this will help save company tax.
Alternatively, those self-employed will claim for their tax-deductible work clothes through their Self-Assessment tax returns. In turn, this will help lower their tax bills.
On the other hand, those employed will also claim for their tax-deductible work clothes through their Self-Assessment tax returns. In return, this will usually result in tax refunds for them.
Final thoughts
When we consider when are clothes for work tax-deductible and in particular contractor clothing is another one of those grey areas. It is indeed not always clear what you can claim for work clothes or business clothing. Therefore, the above shows a good summary of what to bear in mind when you consider if your work clothing is tax-deductible. Please remember to claim back uniform tax and claim for your protective clothing.
Please also have a read of the article covering tax tips for contractors.
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A business suit purchased but has your company name and logo embroidered.
Would that be an allowable expense?
Same question for for outdoor jackets with company name and logo.
Unfortunately not Himanshu! If there is a `duality of purpose’ included i.e. a suit could be worn for a social function and an outdoor jacket could be worn for social reasons then you cannot claim.