Expenses and benefits: clothing

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1. Overview

As an employer providing clothing to your employees, you have certain tax, National Insurance and reporting obligations.

What鈥檚 included

This includes purchase, cleaning and repair costs for all clothing.

What you have to pay and report depends on if it鈥檚:

  • protective clothing that your employee needs to do their job
  • a uniform they only wear at work

2. What's exempt

You do not have to pay tax and National Insurance on or but you may still have to report these expenses to HMRC.

Salary sacrifice arrangements

You do have to report the clothing provided if it鈥檚 part of salary sacrifice arrangement.

3. What to report and pay

If the clothing you provide is not exempt, you may have to report it to HM Revenue and Customs (HMRC), and you may have to pay tax and National Insurance on the value. Check what鈥檚 exempt

Uniforms or protective clothing

You must report the cost on form P11D of:

  • buying the clothing for your employees
  • lending it to them
  • cleaning or repairing it

If you provide uniforms or protective clothing, you can get exemptions (which have replaced dispensations). This means you will not have to include them in your end-of-year reports.

Any other clothing

This includes clothing employees wear at work that is not necessary protective clothing or a uniform.

If you buy other clothing for employees, or lend it to them, you must:

If your employees buy it and you pay them back, you must:

  • add the value of the benefit to your employee鈥檚 other earnings
  • deduct and pay PAYE tax and Class 1 National Insurance through payroll

If your employees buy any non-durable clothing (for example, tights and stockings) and you pay them back, you must:

  • add the value of the benefit to your employee鈥檚 other earnings
  • deduct and pay PAYE tax (but not Class 1 National Insurance) through payroll

If your employees pay to have clothing cleaned or repaired, you must:

  • add the value of the benefit to their other earnings
  • deduct and pay PAYE tax and Class 1 National Insurance through payroll

4. Work out the value

The value of clothing for tax and reporting depends on whether you give or lend it and who initially pays for it.

Clothing you give to employees

Use whichever is the higher of:

  • the second-hand value of the clothing when you give it to your employee
  • the initial cost to you of the clothing

Clothing you lend to employees

Use whichever is the higher of:

  • 20% of the clothing鈥檚 market value when you first provided it
  • any annual rental or hire charges you pay for it

Clothing your employees buy and you pay them back for, or cleaning and repair costs

Use the amount of money you give your employee for the clothing, cleaning or repair.

Salary sacrifice arrangements

If the cost of the clothing is less than the amount of salary given up, report the salary amount instead.

These rules do not apply to arrangements made before 6 April 2017 - check when the rules will change.

5. Technical guidance

The following guides contain more detailed information: