Everything You Need to Know About Tax Rebates on Uniforms
Costs for acquiring uniforms, as well as reasonable costs incurred to maintain and repair them, are tax deductible, as long as these are borne by the employee.
There are three conditions before a Uniform Tax Rebate may be availed of: (1) the clothing must be a uniform; (2) it must be required in the performance of the work; and (3) the employee must bear its cost.
- The clothing must be a uniform
The first requirement is deceptively complicated. In fact, many times, the determination is on a case-to-case basis. The test is this: does the clothing identify its wearer (the employee) as having a particular work or occupation? Does it identify him or her as working for his or her particular employer? If the answers are yes, then it is a uniform.
The simplest ones involve traditional uniforms. There are those kinds of uniform that are easily considered as one for purposes of deductibility – for instance, the uniforms of hospital staff, nurses, policemen, army members, etc.
Some employees, however, do not have traditional uniforms for their trade and profession. They wear articles of clothing that are considered as uniform and some that are not. For example, flight attendants who are required to wear grey vests and slacks with the airline’s logo and name sewn on them can consider these articles as part of their uniform. Their black leather shoes, white socks, and white long sleeves, however, may not be considered as part of their uniform.
Some companies require their employees and staff to wear particular shades of color when they go to the office. Unfortunately, this does not, by itself, qualify their clothing as uniforms. Just because everyone is wearing different shades of blue, which happens to be the company’s trademark color, doesn’t make all of their blue clothes uniforms.
Would wearing badges do the trick? If the badges are mere clip-ons and can be readily removed, and everything else – the shirt, pants, blouse and skirts – are otherwise ordinary clothing, chances are, they won’t be considered as part of the uniform. If certain identifying features are, however, sewn into the fabric of the clothing (similar to the flight attendants mentioned above), then perhaps, the articles of clothing can be safely classified as one.
However, dinner jackets of waiters in restaurants – although without any company logo embroidered or sewn on them – may be considered as uniform because it has been the practice and custom in the food service industry for them to wear such black jackets.
Again, the rules in determining a uniform for purposes of tax deduction are a lot. In the end, determining whether a particular article of clothing entitles its wearer to a Uniform Tax Rebate should be limited to each case. The facts and circumstances as a whole have to be considered before coming up with a conclusion.
- The clothing must be required in the performance of the work
This follows from the general rule, which makes business expenses deductible. According to the law, deduction is allowed if “the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment.” Otherwise, the amount will be personal in nature, and should not warrant a rebate.
- The employee must bear its cost
This also stems from the same provision of law cited above. The other requirement to allow deductions from earnings is that “the employee is obliged to incur and pay it as holder of the employment”.
If the item was furnished by the employer, it can be considered as a gift, and may instead be taxable to the employee.
Also, this requirement seems to explain the ratio for a Uniform Tax Rebate. If an employee has no choice but to wear a particular piece of clothing to perform his or her work, and he or she had to buy the clothing himself or herself, then the State will compensate this condition through a tax rebate.
Extent of the rebates
As mentioned, rebates cover the cost of acquiring the clothing, and any reasonable costs of maintaining and repairing the same. Laundry costs are included here. If the law grants a Uniform Tax Rebate at the first instance, it shall also grant rebates in the course of using the clothing.
The main requirement to avail of these credits is that the amounts must be reasonable. However, what is reasonable is difficult to determine and subjective. Fortunately, agreements are in place providing for the reasonable rates for some industries, trades and professions, such as agriculture, building, electrical and electricity supply, seamen, etc.
A table lists the different fixed rates depending on the industry; values range from as low as 60 GBP per year to as high as 185 GBP per year (for ambulance staff on active service). Nurses, healthcare workers, and pilots have their respective rates as well. For those whose industries are not in the list, they are entitled to a rebate of up to 60 GBP per year.
How much may be claimed
An employee may claim actual amounts or a flat rate determined by the HM Revenue and Customs (HMRC). Receipts should be provided if claiming actual expenses, subject to the limitation of reasonableness. Flat rates are already considered reasonable, depending, as mentioned, on the industries concerned.