Contractors can claim certain items of protective clothing, such as safety boots, overalls and uniforms as legitimate business expenses, enabling them to benefit from a tax deduction.
However, as Abbott Moore tax partner James Abbott explains, HMRC’s rules are very strict and most clothing will not qualify: “Both HMRC rules and case law show that most clothing falls into the duality of purpose trap, meaning it is not an allowable expense.
“We all need to wear clothes for warmth and decency, and we wear clothes when not performing our duties; so only uniforms or protective clothing worn as a matter of physical necessity because of a contractor’s job will qualify.”
Underlying principles ‒ duality of purpose
As with all expenses, Abbott highlights that HMRC is very clear that clothing qualifying as a business expense must only be worn “wholly,exclusively and necessarily in performing the duties of the employment.”
“Most contractors are office-based knowledge workers and, although they may visit clients with strict dress codes, these outfits can, and probably will, also be worn outside of the workplace. This duality of purpose is what excludes most clothing as allowable expenses.”
HMRC’s guidance specifically states that “the fact that particular clothing may be necessary to carry out a particular job does not make the cost of that clothing deductible”, citing the examples of a night watchman and shop assistant as to why.
The same principle applies to other personal appearance and grooming costs, such as make-up and hairstyling. This is true even for entertainment freelancers who incur such costs when literally performing their duties, as some high profile test cases have proved.
“The most common occurrence of contractors requiring uniforms is for those in the construction sector working on site,” continues Abbott. “Although it might appear that a contractor wearing a hardhat and high visibility jacket with a client’s logo puts their IR35 status at risk, this is in fact not the case.
Although it might appear that a contractor wearing a hardhat and high visibility jacket with a client's logo puts their IR35 status at risk, this is in fact not the case
James Abbott, Abbott Moore
“Construction subcontractors will often use a client’s branding to signify to a site manager that they have the right to be on site, so the use of a uniform can deliver important health and safety benefits.”
Media and marketing contractors, particularly those working in field and experiential marketing, may also find themselves required to wear branded outfits or costumes when working at an event. Abbott’s view is that the cost of a costume will be allowable, but it is unlikely that HMRC would allow the costs of an outfit with a fashionable brand’s logo.
“For a uniform to qualify as tax deductible, it must be clearly branded with the contractor’s business name or that of the contractor’s client. A discreet company patch stitched onto an expensive set of wet weather gear used mostly for sailing weekends and not work won’t qualify,” adds Abbott.
Protective clothing is generally more straightforward, although waterproof and cold weather clothing that is not clearly a uniform falls into the duality of purpose trap and is excluded.
“Overalls, safety boots, gloves, goggles and hardhats are examples of protective clothing worn as a matter of physical necessity because of a contractor’s job,” explains Abbott. “A contractor could buy this sort of equipment using a company credit card and enjoy a corporation tax deduction as with any legitimate business expense.”
HMRC also publishes flat rate deductions (section 367 of ITEPA 2003) for employees who bear the cost of work equipment, such as tools and special clothing.
“Assuming the protective clothing meets the requirements of HMRC’s rules, there is also no benefit in kind (BIK) charge on the contractor,” notes Abbott.
He concludes: “With the exception of some construction, engineering, oil, gas and energy contractors, the vast majority of contractors are office-based knowledge workers, so the opportunities to claim for clothing expenses are limited.”