Have you heard about tax tabs?
It is not surprising that although more and more companies are discovering that corporate clothing and a corporate identity are universally recognised as a requirement for a modern and stylish image many procurement and personnel professionals are not aware of all of the tax rules regarding uniforms.
What many people are unaware of is that the Inland Revenue enforce a tax on ‘plain’ items of clothing that are issued free of charge to employees. Unless it is essential protective workwear, clothing issued free by the employer is considered a ‘fringe benefit’ to the employee as it could be worn outside of the work environment without being clearly identified as having been issued by the employer.
The tax liability of 20% of the cost price can be applied to either the employee or the employer if the issued clothing has not been clearly and permanently logo’d. This requirement is not well broadcast by HM Revenue and not all companies are aware of it, the rules generally only come to light on an inspection of a company’s books when invoices for staff clothing could be questioned. Removable identification, such as a pin-on badge, will not satisfy the requirement, as the clothing is effectively unmarked once the badge is removed.
Most companies obviously want their staff clothing to carry the company logo to enhance their corporate image and strengthen the brand but it is certainly something those responsible for purchasing should be aware of. Making sure that our clients get the very best advice and service is important to us at L.E. Graphics. For all of the corporate clothing we provide we ensure that everything carries a permanently attached company logo.
For suiting products this can be done by using a woven ‘tax tab’ sewn into the seams of the garment which can be clearly visible when the garment is being worn. Embroidered or printed logos are branded on all other products including t-shirts, fleeces and aprons. This distinguishes the garment as work wear as opposed to leisure wear and complies with HM Revenue regulations.
With brand image so important for companies today, the style of staff uniforms have developed significantly over the last few years. Smart, chic suits and contemporary tops are common place and are garments that many people are happy to wear outside work hours. Therefore companies must be aware of the rules to ensure that they and their employees don’t fall foul of the law.
Please note that this article is for guidance only and professional advice should be obtained before acting on any information contained herein.