Is work clothing an allowable limited company expense?

Limited company owners cannot offset the cost of standard work clothes against tax, although there are some interesting exceptions. Here we look at how HMRC treats clothing expenses.

Claiming for the cost of general work clothing is not allowed

Any business expenses must meet HMRC’s ‘wholly and exclusively’ test – i.e. that the costs in question have been incurred purely for business purposes – with no personal benefit.

With this in mind, it is hard to justify claiming the cost of clothes you wear to carry out your job – as a contractor or otherwise.

Put simply, you cannot claim for any standard work clothes. HMRC is crystal clear on this point:

No deduction should be permitted under Section 336 ITEPA 2003 for the cost of ordinary clothing worn at work.

Clothing is required for ‘warmth and decency’ – as HMRC puts it – which explains why so few clothing-related expenses can be offset against tax.

But, HMRC provides some exceptions to this general rule, as we explain here.

Protective clothing

All sorts of limited company workers read our guides – not just IT contractors. In some industries, you will need to buy protective clothing and equipment as part of your trade. Where it is a physical necessity because of the nature of the job.

This could include any number of items such as hi-vis jackets, steel-capped boots, and other safety equipment. In other trades, things like aprons and protective overalls are examples of allowed items.

See EIM32470 for more details on protective clothing expenses.

Uniforms

Some uniforms are allowed as long as they meet strict criteria. Fundamentally, the uniform must identify the wearer as belonging to a specific profession or firm.

If your company requires its staff to all wear blue shirts and grey trousers, this doesn’t count. If the uniform includes your company’s badge or logo, this might meet HMRC’s requirements.

Formal evening dress – worn by waiters, for example – may also be tax deductible.

Even when the tax authorities accept that a particular piece of clothing is a legitimate business expense, this may not apply to all articles of clothing worn simultaneously!

See EIM32475 for more details on uniform expenses.

Costumes for actors or entertainers

Any clothing you buy specifically to carry out a performance is allowed. Again, this is not something most contractors could ever justify of course, but we’ve included this point for the sake of completeness.

Repair and upkeep costs

Costs relating to repairing and cleaning any allowable work clothing can also be reclaimed. See EIM32480. Again, you cannot claim for the repair and upkeep of ordinary clothes you wear to work.

HMRC cites the case of Ward v Dunn to illustrate this point.

In this case, a surveyor was not allowed to claim for the costs related to wear and tear of his clothes. This is despite racking up sizeable costs due to the abnormal amount of ‘use’ his clothes withstood.

The reason provided was that such costs did not meet the ‘wholly and exclusively’ test. This demonstrates how tough the rules are.

Limited company directors – general advice

The rules on work clothing expenses are the toughest we are aware of. This is understandable, otherwise many individuals would start to claim for the cost of normal clothing they happen to wear to the workplace.

Be careful when you claim the cost of anything (including clothing) which has a duality of purpose (mixed business and personal use), or just personal use. These costs may be treated as benefits in kind and you and your company will be taxed on the value of the benefit.

In the unlikely event that you incur clothing-related expenses, make sure you speak to your accountant if you have any questions.