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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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The general rule for employees’ expenses: wholly and exclusively

To be deductible from the earnings of an employment an expense must be incurred whollyand exclusively in the performance of the duties of theemployment. The words “wholly” and “exclusively” prevent a deductionfor expenditure that serves a dual purpose, a business purpose and a non-business purpose.The wholly and exclusively rule does not apply to travel expenses, see EIM31805.

An example of dual purpose expenditure is money spent on ordinary clothing that is wornat work. Clothing that is worn both in work and out of work obviously has a dual purposeand so no deduction is allowed. However, even if the clothing is only wornat work no deduction is allowed. This is because at one and the same time the clothing hasthe purpose of providing cover and comfort to the employee as well as the purpose of beingsuitable for work, see EIM31663.

You can allow a deduction for the whole or part of a single expense that has a dualpurpose in two circumstances:

  • where an apportionment can be made between a part that is incurred wholly and exclusively in the performance of the duties of the employment and a part that is not, an apportioned part can be deducted, see EIM31661 and
  • where the non-business purpose is merely incidental the whole expense can be deducted, see EIM31664.

Example EIM31665 deals with an expense that cannot beapportioned. Example EIM31617 deals with a benefits charge thatcan be apportioned.