Can you keep your workers warm with a tax-free benefit?

Are your working conditions beneficial?

The working environment you provide for your employees isn’t usually something that HMRC is concerned with. However, where conditions intentionally result in a significant personal advantage to your staff they might count as a taxable benefit.

Usually, insignificant benefits resulting from “accommodation, services and supplies” provided in the workplace are tax and NI exempt where their primary use is for work, e.g. use of the firm’s phone for private calls. Turning the heating up because your clerical staff are feeling the chill isn’t a taxable benefit. However, there’s a clear difference between tweaking the thermostat and providing items of clothing. The latter can be but is not always a taxable benefit.

If the clothing you provide is a uniform or protective clothing it’s a tax-deductible expense if paid by the employee. If instead you, as their employer, pay for such items for your staff it’s a tax and NI-exempt benefit.

Uniforms. Employer-paid-for uniforms can be provided to workers tax and NI free. The rules on what HMRC considers to be a uniform is a grey area but generally it’s a matter of common sense (see The next step ).

Protective clothing. Also exempt is protective clothing. This covers items designed and intended to protect a worker’s physical safety or their personal clothing from damage.

Extra clothing to keep an employee cosy if you turn the heating down isn’t protective clothing unless cold is a particular hazard of the job, such as working in a cold-store.

The health and safety angle

The Workplace (Health, Safety and Welfare) Regulations 1992 don’t specify a temperature that must be kept at work, but they do require it to be reasonable according to the circumstances. If it’s a cold-store you can’t be expected to keep it at a temperature suitable for, say, office work. If a cold or hot temperature is required you must usually provide your employees with appropriate protective clothing.

If the purpose of providing extra clothing is to keep your employees “reasonably” warm in the workplace to meet health and safety requirements, it qualifies as protective gear and so is tax and NI-exempt as long as conditions are met. Your business can of course claim a tax deduction for its cost.

Conditions

The protective clothing exemption applies only where the clothing is intended for wear while a worker is doing their job. Allowing them to use it on other occasions can mean a tax bill for them and employers’ NI for you. However, if the cost of each item of clothing doesn’t exceed £50 it might qualify an as exempt trivial benefit.

A simple company policy or note in the staff handbook saying that protective clothing is only for work use and may not be used at other times will be enough to keep HMRC happy, and insignificant private use can be ignored. That means it’s OK for staff to wear their company fleece to keep warm on their lunchtime jaunt to the shops.