Providing work wear to your team can really help them look and feel more professional. And good quality, branded uniforms send out the message that you mean business, literally turning your employees into walking advertisements for your company!
As you’d expect, there are a few tax and VAT implications to bear in mind, depending on the items you’re supplying.
The cost is tax deductible for the business on any uniform or protective clothing provided to staff that’s necessary to perform their job. You’re also able to reclaim the VAT on the purchase and there’s no ‘benefit in kind’ for the employees.
If they’re not classed as protective clothing or a ‘uniform’, the VAT and tax accounting depends on whether the employees get to keep the items. When they own the clothing, the company accounts for the VAT as if they’d been sold to them at your cost price. If you’re lending the clothing to your staff, you’ll add the value to the employee’s annual P11D form or as part of a payroll settlement agreement (PSA) to account for the clothing as a taxable benefit.
When items given to individual employees amount to less than £50 in the tax year, you would treat them as a business gift. HMRC may agree the value of the clothes isn’t taxable on the employee as it’s seen as a trivial benefit, which is something we can help you can find out from them in advance.
If you need any help with this or would like any other information, just get in touch on 01782 279615.