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HMRC internal manual

Employment Income Manual

The general rule for employees: expenses: wholly and exclusively: apportionment: decided cases in which apportionment was not permitted

In the case of Hillyer v Leake (51TC90) it was decided that the cost of ordinary clothing worn at work could not be deducted because the expense had concurrently both a business and a non- business purpose. Goulding J. commented:

“the expenditure in question, although on suits that were only worn while at work, had two purposes inextricably intermingled and not severable by any apportionment that the Court could undertake.”

The only exception to this rule is where the clothing is a uniform or is protective, see EIM32465.

Another example of the same approach is Baird v Williams (71TC390), in which an employee was refused a deduction for interest payments on a mortgage used to acquire a property to be used as office accommodation. Laddie J. commented on the mortgage that:

“not only was it used to purchase a pied-a-terre but it was also used to assist the taxpayer to acquire a capital asset. That was no doubt expected to be of benefit to the taxpayer but it takes the transaction outside those which are exclusively incurred in the performance of his duties”.