Dress for Success - The FUSE Guide to Clothing Expenses

When you run a small business, understanding the tax rules and getting your head around the various allowable and non-allowable expenses can be challenging and is certainly a minefield.

In particular there are some expenses that are just not black-and-white and the tax treatment of an expense may differ from business to business. One question that always comes up is whether clothing is allowable as a business expense. We’ve had clients say “I need to look good for my business” or “I am required to dress a certain way in my industry”. We know it’s important to dress for success.

However clothing is not allowable as an expense for any of these reasons. In order for an expense to be allowable it must be incurred wholly and exclusively for the purpose of the trade, and this means that there would be limited duality of purpose. For example we must all wear clothes for decency and warmth and thus the requirement to wear clothes is not exclusively for the purpose of the trade.

Looking good or wearing a certain style to appeal to prospects is a choice and not solely for the purpose of the trade. Unfortunately there has been case law supporting this in the past whereby in one case a barrister argued that their expensive suit was required and they needed to look a certain way in court for the purpose of the trade, but this was dismissed by HMRC and further lost at appeal. With taxation we must always consider precedence and case law.

However there are a few exceptions and we give some examples of allowable clothing below;

• Uniform contractually required to be worn. For example if a client or the workplace requires wearing a specific uniform or out of the ordinary outfit then this would be an allowable deduction.

• Protective clothing such as aprons, steel toe boots and overalls. This could expand to certain other items such as a sports bra or running trainers for an active personal trainer may be allowable provided it doesn’t constitute daily way, whereby tracksuit bottoms wouldn’t be allowable as they do not provide a specific protective purpose.

• Branded clothing such as a t-shirt or jacket with your company name and/or logo on.

• Costumes such as for TV, film and entertainment. This is a vast area and would certainly cover clothing required for on screen duties however clothing worn for ordinary daily activities would not be allowable. Dressing a certain way for a rehearsal wouldn’t be allowable but adorning full Victorian dress because the casting agent has specifically asked you to wear for a period drama would most likely be allowable.

If you are unsure about any of the rules and whether they will apply to you ask yourself the following:

• Would I wear this to and from work? If so this would not be an allowable cost

• Would I wear this on a normal day-to-day basis? If so this would not be allowable cost

Here are some potential scenarios;

“I am in fashion and I’m required to look stylish to get seen.” Unfortunately clothing is not an allowable cost regardless of how you choose to look in your industry.

“I’m going to award ceremony and need to wear black tie or formal dress.” This is not exclusively for the trade and constitutes normal clothing for an event associated with your industry and not for providing services, so is not allowable.

“I’m a photographer and I’m required to take a photo of an item of clothing for my blog of my clients and choose not to return the clothing after use.” This would not be an allowable expense as the item could be returned, unless it has been soiled or damaged and has no further use. If you keep it for personal use it would not be an allowable expense or a personal use adjustment would need to be applied.

“I’m a hairdresser and need to wear trainers as I’m on my feet all day.” This would not be an allowable expense as this is normal footwear.

“I’m a children’s entertainer and I need to wear a specific costume.” This would constitute costume and is most likely not usual daily wear so would be allowable

“I need to wear a formal suit to work as it wouldn’t be acceptable to turn up in jeans.” This constitutes normal workwear and would not be allowable.

“ if I’m on site all day in the rain as a building inspector, with my protective waterproof jacket be allowable?” Most likely in this case it should be allowable if the jacket is holding exclusively for the purpose of the trade and not a jacket you would wear outside of work.

“I’m a yoga instructor and wear my leggings all day.” If this constitutes your every day living and working wardrobe this is not an allowable expense.

“If I’m required to play the part of the back legs of a donkey on stage, will my brown trousers bought for the part be allowable?” Yes!

FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment and professional services. Our clients vary in size from self employed sole traders, small enterprises and medium size businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.