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HMRC internal manual

National Insurance Manual

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HM Revenue & Customs
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Class 1 NICs: expenses and allowances: clothing/uniform allowances

Regulation 25 and paragraph 9 of Part 8 of Schedule 3 to the Social Security (Contributions) Regulations 2001 (SI 2001 No 1004)

An employer may give an employee a sum of money to purchase clothes/ uniform or may reimburse them for the cost of such items.

If the clothes/ uniform can be worn at any time, and not just when the employee is carrying out his duties, then there will be a liability for Class 1 NICs on the amount involved. This is because the whole amount is earnings for the purposes of calculating NICs (see NIM02010 regarding the meaning of “earnings”) and cannot be excluded from liability by virtue of any of the provisions of Schedule 3 to the Social Security (Contributions) Regulations 2001.

There is no specific exclusion in Schedule 3 relating to clothing expenses and there is no way that an expense paid in respect of clothing which can be worn at any time can be excluded as a business expense by virtue of paragraph 9 of Part 8 of Schedule 3 because it is not a “specific and distinct payment” incurred in actually carrying out the employment.

Under paragraph 9 of Part 8 of Schedule 3 a clothing expense payment can be excluded from the calculation of earnings as a business expense if

  • the clothes/uniform can only be worn at work. For example, a jacket which bears a company crest or logo, or where the particular item does not bear a logo but the employer directs that it must only be worn at work; and
  • there is evidence regarding the cost of the clothing/uniform.

The tax position is more restrictive than the NICs position. See EIM 32450, previously SE32450 onwards for guidance.

If an employer gives an employee a sum of money for non-durable items (for instance, tights or stockings) the amount involved can be excluded from earnings when NICs are assessed. The cost of non-durable items is regarded as a business expense payment on the grounds that such items need to be replaced at frequent intervals and they will only last long enough to be of use to the employee in the work environment. This is not, however, the case for tax - see EIM32450, previously SE32450 and the example at EIM 32476, previously SE32476.

If the employer purchases the clothes/ uniform and gives the items to the employee, the cost of those items can be excluded from earnings when Class 1 NICs are calculated because the clothes will be excluded as a payment in kind by virtue of regulation 25 and paragraph 1 of Part 2 of Schedule 3 to the Social Security (Contributions) Regulations 2001. There may, however, be a liability for Class 1A NICs. See NIM13000 for guidance on the general principles regarding Class 1A liability.

See NIM05641 for specific guidance on clothing allowances for civic dignitaries.