Press Room

Is the provision of clothing taxable?

The law says that clothing is primarily worn for the purposes of personal decency and so when used for work will effectively have tow purposes, and thus cannot be ‘exclusively’ used for work.

Exceptions to the rule – uniforms and special clothing are allowable and therefore do not suffer a tax consequence for the employee or director if used.

You can however offer suits/clothing for staff and directors:

If the company buys the clothes and gives them to the employee

1. Consider offering the clothing as part of the remuneration package
2. This will reduce the cost of the employees NIC

 If the company buys the clothes and lets the employee use them

The tax charge in this case is simply 20% of the cost of the goods, i.e.

£250 suit purchased and ‘lent’ to the employee; would result in the employee having a plld charge of £50 which = £10 if a basic rate tax payer and £20 as a higher rate tax payer!!

Business saving

Your business would be able to reclaim the full cost of the clothing including VAT immediately and the goods.