Everything you receive as part of your employment is considered pay. This includes any clothing you receive from your employer, unless it is workwear. As a self-employed person, you may only deduct the cost of workwear from your profit or net income.
Workwear
Workwear is defined as clothing that is (almost) exclusively suitable for wearing in the course of work. ‘Almost exclusively’ means that the clothing must be suitable for wearing at work to a degree of 90% or more. Conversely, the clothing must not be suitable for use outside of work to a degree of 10% or more.
At the Gelderland District Court A case involving a minister was recently heard. He had bought a morning coat, which he wore whilst carrying out his ministerial duties. According to the court, however, this was irrelevant because the morning coat is suitable for wear outside of work. The court did acknowledge that morning coats are not worn very often these days. However, they are still suitable for wearing at wedding receptions, funerals and other formal occasions.
Workwear, after all
Clothing that is also suitable for use outside of work can be classified as (tax-deductible) workwear. This is possible if the clothing:
- remains in the workplace;
- is given physical characteristics;
- qualifies as a health and safety provision.
If the clothing in the workplace If you are to continue wearing this clothing, the necessary facilities must be available at work. This includes things such as a place to store the clothing and the opportunity to change. Under no circumstances should you take the clothing home with you, for example to wash it.
Physical characteristics logos or emblems associated with the company. These must be visible on the outside of each item of clothing and must measure at least 70 cm². A pair of jeans with a company logo of sufficient size on the outside is considered workwear for tax purposes.
Examples of clothing that qualifies as health and safety provision, you can probably imagine. Shoes with steel toe caps, thermal underwear for people who work outdoors, cut-resistant trousers for gardeners and foresters, and so on.
Free space
Naturally, you may provide clothing – which is not classified as workwear for tax purposes – to your employees tax-free within the discretionary allowance under the work-related expenses scheme. This allowance amounts to 1.2% of your taxable wage bill.
If you have any tax-free allowance left over, that’s fine. Classifying clothing as tax-deductible workwear frees up some of your tax-free allowance. You can then use that for other attractive tax-free allowances or benefits in kind.
Will we Why not pop in soon, over a tax-free cup of coffee, to explore the options for rewarding your staff in the most tax-efficient way possible? Or perhaps one of our other Tips and Tricks at your place.