September 12, 2023
As a sole trader, it’s inevitable that you’ll invest in work clothes. But how and when can you claim tax relief on them? Understanding the rules is essential to ensure compliance and maximise your business expenses. In this guide, we’ll explore the ins and outs of claiming clothing in your business, providing you with valuable insights and clarity.
HMRC‘s fundamental rule stems from a case involving a barrister who sought tax relief on suits for court appearances. However, the claim was denied as HMRC stated that those suits could be worn for non-work-related occasions. Moreover, HMRC acknowledges that clothing serves a dual purpose of presenting oneself professionally and providing warmth and decency. Consequently, clothing that can be considered part of an “everyday wardrobe” is not eligible for tax relief.
When purchasing a uniform that clearly identifies your profession, you can include it in your accounts and claim tax relief. For instance, a self-employed nurse’s uniform would qualify. However, expenses for items other than the uniform itself, such as shoes or stockings, cannot be claimed.
The cost of protective clothing is allowable, especially if it serves to safeguard you during work activities. For example, if you’re a jobbing builder and purchase steel toe-capped boots and a helmet for on-site use, these expenses can be claimed. Conversely, everyday clothing like jeans and shirts for on-site tasks wouldn’t qualify.
If you’re an actor, musician, or entertainer, and the clothing you’re acquiring is for a costume or specifically for performances in film, stage, or TV, tax relief can be claimed on those items. For instance, a children’s magician purchasing a cape for their act can include the cost of that cape as a business expense.
HMRC provides an example of a waiter who must wear an evening dress, including a tailcoat, as part of their job. Since this attire doesn’t fall under the category of an “everyday wardrobe,” it is eligible for tax relief. However, it’s crucial to note that expenses incurred for buying or hiring evening dresses for business functions like awards ceremonies would not qualify. Attending such events is not deemed essential for performing your job, unlike the waiter who relies on it as a crucial aspect of their role.
Many wonder if the cost of business-branded apparel, such as t-shirts or fleeces, can be claimed. Although these items don’t qualify under the previous exemptions, you may consider including them as advertising and promotion costs. However, it’s important to be aware that HMRC might argue that such expenses serve a dual purpose, both for business promotion and personal clothing needs.
Claiming specific costs related to work clothes can sometimes be ambiguous. In such cases, it’s advisable to consult with your accountant or tax advisor to gain clarity and ensure compliance with HMRC guidelines.
Understanding the rules around claiming business expenses for work clothes is essential for sole traders. By adhering to HMRC guidelines and seeking professional advice when needed, you can make informed decisions, optimize tax relief, and maintain compliance. Remember, speaking with your accountant is the best way to navigate any uncertainties and ensure accurate financial reporting.