Don't get caught out when providing your staff with work uniform. There are policy guidelines that you should follow relating to reporting, National Insurance and tax to avoid contravening any government regulations.
PLEASE NOTE: This article is for informational purposes only. This article is not Tax advice, nor are your tax affairs part of the service at XAMAX® - we are a workwear company. You should CONTACT HMRC DIRECTLY and speak with your accountant before actioning anything - XAMAX® will not be able to help with your tax. Read our disclaimer.
Do I Have To Provide Uniform For Free?
Brief Overview: You do not legally have to pay for a compulsory uniform, but most employers do provide 2-3 sets free of charge. You can deduct payment for uniform items at source, but, as said, most employers do not do this for the minimum number of uniforms being issued.
Employees can claim tax relief for having to launder and maintain their employer issued compulsory uniform. Employers must pay for any form of Personal Protective Equipment or Clothing to complete a work task safely - including protection against severe weather (including prolonged sunshine and winter conditions).
Be sure you follow HMRC's rules about reporting the PPE and other clothing you buy for staff.
Be Aware Of What Constitutes a Uniform
Just because you ask your staff to wear a certain colour t-shirt and trousers does not make that a work uniform. If there is an integral branding feature and "the employee would readily be recognised as wearing a uniform by the person in the street", as quoted from the .gov.uk HMRC website, then it can be classed as a uniform for reporting purposes.
Other things like coveralls and PPE can be more easily classed as reportable.
If you issue staff with a set of branded polo shirts and ask them to wear blue or black tracksuit pants to match, the polo shirts are classed as uniform and can be deducted, but the employee bought tracksuit pants are not and cannot be deducted.
Likewise, any clothing which simply conforms to a general colour scheme or has a removable company badge, is not classed as uniform.
You Do Not Have To Pay For Uniforms... But You Probably Should At Least Pay For Part Of It
Legally speaking, an employer is not bound to pay for compulsory uniforms. However, if you switch to a uniform policy over a dress code, it is expected that you will at least issue your staff with three branded polo shirts or shirts free of charge, as a minimum. Many employers will issue a couple of pairs of workwear trousers too, so that staff are always able to have a uniform set clean and ready to wear.
If you fail to do this, you run the risk of staff heading to work for another company which does provide the benefit of a uniform - which has a relatively low expense to you. It is also a great opportunity to show you value your staff and inspire loyalty and productivity in your staff. For these two reasons alone it makes sense to provide some uniforms to your staff for free.
Make sure you report the cost on a HMRC P11D form and pay Class 1A National Insurance on the value of the clothing.
Alternatively, you can ask employees to pay for their own uniforms and you can deduct from their salary.
An important thing to note: if there is anything that could be classed as PPE, employers must pay for this so that your employees can complete their tasks safely and at minimal risk of harm. This covers everything from rubber gloves, aprons, boots, eye protection, face masks, safety boots etc.
Tax Implications On Your Staff Uniforms
Now that we have established what constitutes a uniform and you have hopefully decided (at least in principle) what you are willing to issue to your staff, let's look at the tax rules.
- Clothing provided for an employee is classed as an employment related benefit
- He or She is taxable on this benefit to the cash equivalent of the cost to the employer (if it's given to them)
- If the uniform is loaned to the employee, 20% of the "market value"* is applied annually
*this is the value the clothing would fetch on the open market when sold by the employer. As it is clearly a piece of uniform, this is likely to be negligible
Policy Suggestion For Staff Uniforms
With all of this in mind, here is a short policy suggestion for issuing and managing your staff's uniforms, from which you can crib and adapt to suit your own business' needs:
The employer shall issue the employee with one complementary uniform set which will comprise of: 3x branded polo shirts, 2x branded trousers, 1x branded sweatshirt, 1x branded Hi Vis vest (to be worn over outdoor clothing should the employee be working outside). The employer will issue the uniform items free of charge to the employee and they will be treated as a deductible item for HMRC purposes. Additional uniform items can be ordered by the employee, but the cost will be deducted from salary payments. The employee shall wear at any one time a branded polo shirt and pair of trousers and, as a default, a branded sweatshirt (but this can be removed to aid comfort). If working outside and the employee requires additional warm clothing, they may wear their own coat or jacket providing it is of matching colour and free from design or other branding, and the hi vis vest must be worn external to the jacket. PPE clothing must be requested from supervisors and will be provided free of charge as long as it complies with the minimum requirement set out in the health and safety and COSHH risk assessments. The employer is not liable to pay for repairs, cleaning or any other maintenance to uniform clothing. The employee should take reasonable care to look after and maintain their free uniform, but the employer will aim to renew and replace worn out items ever 12 months (providing the employee has taken due care with said items).
Remember that is just a suggestion
On this last point, this can become a contentious issue, but as an employer, you need to consider the implications of not keeping your employees supplied with clean and professional looking uniforms.
How your staff appear is a representation of the service your business will offer to other potential customers when they are seen wearing a uniform.
Don't let them give the appearance that you offer a shabby service.