Other expenses: clothing: uniforms provided by employer
Clothing provided for an employee by an employer is an employment related benefit within section 201 ITEPA 2003 (see generally EIM20001 onwards). Unless for the tax year 2015 to 2016 and earlier the employee is in an excluded employment, he or she is taxable on the benefit unless they are entitled to an off-setting deduction under section 336. The guidance at EIM32475 to EIM32477 applies to the benefit of employer provided clothing in the same way as it applies to clothing that the employees have to buy for themselves.
If the benefit of employer provided clothing does not satisfy the conditions for a deduction under section 336 the employee is taxable on whatever is the cash equivalent of the benefit. See generally EIM21102. If the clothing is given to the employee the cash equivalent is the cost to the employer. However, if the clothing remains the property of the employer, the taxable amount is the “annual value” of the use of the clothing (see EIM21631). That is, usually, 20% of its market value when first applied as a benefit.
Note that the market value of the clothing is not the same as the cost to the employer. It is the price that the clothing might reasonably be expected to fetch on a sale in the open market (see EIM21632). The market value of a set of “corporate clothing” is likely to be small, and 20% of that figure may well be negligible. Where the corporate clothing does not satisfy the conditions for a deduction under section 336 (see EIM32477), you should therefore take into account the guidance on “trivial benefits” (EIM21860 onwards) before seeking to charge tax on employer provided clothing which remains the property of the employer.