Tax relief for PPE costs
QUESTION: I am returning to work shortly after the business I worked for closed due to Covid 19. I am concerned about my health and safety and I would like to understand the tax implications of personal protective equipment costs incurred by the business or if I pay for it myself?
ANSWER: All businesses should carry out risk assessments to establish what personal protective equipment (PPE) their staff may need. Specific HMRC guidance relating to Covid-19 confirms that, where the risk assessment shows that PPE is required, it is the employer's responsibility to provide it and there are no tax consequences for the employee.
If PPE is required but the employee purchases it instead, the employer should reimburse the employee, with no tax consequences. If this does not happen the guidance states that no tax relief is available to the employee on any unreimbursed cost of acquiring PPE. The onus falls squarely on the employer to provide and pay for any necessary PPE in line with their obligations under health and safety regulations.
Where a risk assessment does not call for specific PPE, but the employer wishes to make extra PPE or protective clothing available to their staff as a precautionary measure or where the employee may prefer to wear additional protection as their view of the risk differs from their employer's assessment – the current Covid-specific guidance is silent on this point, which means we have to look at the existing tax rules.
HMRC guidance says that where an employee bears the cost of ‘genuinely protective clothing' which is ‘worn as a matter of physical necessity' they can claim tax relief for the cost. Equally provision of the items by the employer will not create a benefit in kind.
Given that any essential PPE should be supplied by the employer, the avoidance of a benefit in kind on anything additional is dependent on how narrowly HMRC interprets ‘necessity'. HMRC have confirmed that any extras that the employer opts to provide over and above the essentials will create a benefit in kind, although HMRC notes that the trivial benefits rules may help if the cost is under £50 per employee.
A similar issue arises where staff choose to obtain additional PPE themselves at their own cost, beyond that which the employer is obliged to reimburse. Again, under existing rules, employees will not get any relief. HMRC guidance makes it clear that tax relief for the employee is only available ‘where the duties require it to be worn and the employee must bear the cost'. If the employer has determined that the duties do not require it, but the employee feels differently, then tax relief on the cost is not available to the employee.
After PPE, staff may also be concerned about the possible contamination from taking work clothing home. Government guidance suggests that, where possible, staff should change into work uniforms – and wash them – onsite, rather than take them home. Employees may also wish to wash their own clothing more frequently. If employers want to help with any of these costs, what are the tax consequences? And if the employer doesn't help, can employees get tax relief?
The first question is whether the item in question is ‘ordinary' clothing or (part of) a uniform. It is generally understood that there is no tax relief available for ordinary clothing because employees have to wear something for the sake of decency. Uniforms are effectively treated for tax purposes as protective clothing which the employer can provide and maintain tax-free.
To qualify as a uniform (or part of a uniform) each item must be recognisably a uniform and the employee must be required to wear it. Pinning a badge to a blouse is not enough to make it a uniform, nor is requiring employees to wear specific colours of clothing. Neither would opt to leave clothing on-site, rather than take it home, and arguing that it has been ‘reserved' for work make something a uniform. However, fixing permanent badges to items may be enough for it to pass the basic test of appearing to be a uniform to a person on the street.
The test applies item by item, so it is possible that not all items in an outfit will qualify as uniform. Where the employee is provided with a branded top and an ordinary pair of, unbranded, black trousers say, the trousers are not uniform and a benefit in kind will arise. This is calculated either as the cost to the employer if the item is given to the employee, or 20 per cent of the market value if it remains the employer's property.
The key point with protective clothing is that, unless there are specific Covid-19 measures, it is always necessary to go back to existing legislation. While employers and employees might be looking for – or even expecting - more generous tax treatment in these challenging times, we can't always presume that it will be available.
:: Malachy McLernon (m. email@example.com) is a director of PKF-FPM (www.pkffpm. com). The advice in this column is specific to the facts surrounding the question posed. Neither The Irish News nor contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.