Clothing allowances : all you need to know
Many jobs require workers to wear, clean and maintain specific items of clothing in the course of their work. From branded baseball caps to polo shirts, a wide range of companies require their staff to wear specific items of clothing to create an identifiable corporate identity. The costs of purchasing, cleaning and maintaining these items can have tax implications for both the employer and the employee. Find out more with Mooncard.
It is estimated that up to one-third of people employed in the UK are required to wear some sort of uniform for their work.
A uniform is defined by HMRC as a “set of specialised clothing” that is “recognisable” and “identifies someone as having a particular occupation”. Obvious uniforms include the example of police uniforms, registered nurses’ uniforms and children’s school uniforms.
However, many more jobs require staff to wear specific items of clothing, and under certain circumstances, these may also qualify as a uniform. Think of fitness instructors required to wear branded T-shirts, restaurant staff required to wear baseball caps and polo shirts during service in corporate colours and banks requiring customer-facing staff to wear shirts and blouses with the bank logo on them.
If an employee is required to wear a uniform and to maintain and clean it at their own cost, (which may or may not mean a payment to a dry-cleaning company), then the employee can claim a tax-free allowance from HMRC. The same rules also apply to self-employed workers. Employees working from home are unlikely to be eligible for a clothing allowance due to the nature of their employment but are eligible for tax relief for additional household expenses.
What is not a uniform?
The definition of what is and is not considered to be a “uniform” has been clarified through various court cases. The general idea is that if the items of clothing can be considered “ordinary”, and could be worn outside the workplace, then they do not qualify. So, if a company simply requires staff to wear “smart” business wear, then unless specific corporate colours or branding are required, this is unlikely to qualify as a uniform.
Flat-rate expenses and tax relief
A wide range of business expenses, from relocation costs to meal allowances, are covered by specific flat rate tax relief provisions. Similar flat rate allowances are also in place for staff required to wear uniforms.
HMRC has created a list of industries and occupations likely to need to wear a uniform or PPE, and the corresponding flat rate tax deduction that employees can claim if their employer does not reimburse them directly. This flat rate is extremely varied and ranges from a rate of £1,022 for airline pilots and flight crew to £60 for food workers.
For more information, the full list can be consulted on the HMRC website. If your occupation is not listed but you are required to wear a uniform, then the flat rate of £60 applies.
School uniforms and grants
Local education authorities manage school uniform grant schemes for school children. The practicalities and procedures vary but they are all intended to cover the costs of school clothing for low-income families. The rate paid per child varies, and, like many other types of benefit, the school uniform grant is means tested, and is usually only awarded once in the school year. If you or one of your staff feel that they may qualify, an application should be made through the local authority.
Employees can claim a flat rate allowance for clothing if they have to wear a uniform (in the broad sense of the term) and have to clean it and/or spend their own money on repairing it. If the employer pays all the expenses, including the costs of laundering, then the employee cannot claim any tax relief. People using the flat rate scheme do not have to keep any receipts or an archive of what has been spent. Nevertheless, keeping track of expenses makes good business sense and a Mooncard corporate card can streamline the process.
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