A uniform can be an important part of creating your brand, helping customers identify who works in your business and ensuring that employees own clothing isn’t damaged at work. But what are the rules and guidelines around providing uniforms to staff?
Firstly, from an employer’s position, you need to ensure that your uniform is a uniform. A general guideline for tax deduction is that it must carry your business logo/name meaning that the clothing is only worn for your business. This is separate to safety wear or protective clothing which is necessary for the employee to safely do their job. Simply being a specified colour is not adequate for clothing to be a uniform for tax purposes. If you provide employees with none uniform clothing such as a coloured shirt or blouse, or they are deemed to own the clothing once you provide them with it then you need to ensure that the potential benefit is being reported to HMR&C and subject to tax and national insurance correctly.
Many employers provide an agreed number of sets of uniform to staff – typically two or three – at a cost to the company. However, did you know that so long as the uniform isn’t protective equipment (as covered by the Personal Protective Equipment at Work Regulations 1992 (as amended)) then you can pass the cost of uniform onto the employee? Initially, this cost saving to your business may seem attractive, but you need to consider:
– If the employee buys the uniform it is then their property. This means that if they leave your employment they keep it, and could wear it casually when it becomes tired and damaged, or in circumstances you wouldn’t want your brand associated with potentially damaging your businesses image.
– Can your employees afford to buy uniform, which is especially an issue for new employees. Is it reasonable to expect a new employee to pay out for several sets of uniform before they start working for you?
Being pragmatic, you can consider providing staff with a defined number of sets of uniform each year, which it is their responsibility to maintain and keep in good order. If they require more uniform – such as through damage or loss – then they buy these from you. Such a policy should be included in your company manual and policies. Periodically you can provide new uniform, and when an employee leaves you retain ownership of the clothing so should take back before they leave. You may not want or need used uniform, but by taking back to retain control of when and where your logo is worn and by whom.
In summary, if you provide access to qualifying uniform, as an employer you will get tax relief for the cost. Your employees will not be subject to tax on a deemed benefit. If you have any alternative arrangements please contact us for a review of your position to ensure that firstly you are compliant, and secondly whether you could benefit from a change in your policy to be more commercially and tax efficient.