Claiming Clothes – Confusion and Uncertainty
Claiming clothing against tax for Self Employed Yoga teachers is an area thats fraught with confusion and uncertainty.
The basic rule for deducting expenses is you can claim them if they are “Wholly and Exclusively” for business.
The Wholly and Exclusively rules apply to Sole Traders deducting items in their own accounts/Self Assessment, and to companies deducting items in their accounts.
- If you are employed under PAYE as a yoga teacher then the rules are tighter, “Wholly, Exclusively and Necessarily”, but as most PAYE Yoga Teachers (eg at a gym) will have some Self Employment as well its probably not a distinction to worry about.
The basic rule is extended to allow apportionment where a expense has both private and business elements, eg a mobile phone bill, or car running costs – so you would think clothes could be apportioned as well? Alas no, special rules apply.
Generally a wardrobe of work clothes for a professional aren’t deductible – this follows the rule in Mallalieu v Drummond where court clothes for a Self Employed Barrister were held to not be deductible as they had “Duality of Purpose” – as well as being required for court use they also provided warmth and decency. This so called duality meant the court considered they were private expenditure and not deductible for tax.
However its long acknowledged that uniform or protective clothing can be claimed. In the decision for Mallalieu v Drummond the judges said as much, and referred to a self employed waiter who may have a set of black tails, and they thought this would be allowable. They said that claiming for clothes was based on a question of degree around the speciality nature of clothing versus their everyday use. HMRCs commentary on the case is here. Remember HMRCs commentary is not law, just their interpretation of law, but it takes a brave and well funded person to challenge them.
In Practice
So, where does this leave a Yoga Teacher? Well there are no hard and fast rules, and the question will be around the everyday nature of your clothes versus their specialist nature, however:
- Functional clothes are more likely to be deductible than yoga fashion.
- The more teaching you do, the less likely the clothes are everyday wear. Its harder then for someone teaching one class a week to justify a claim than it is someone teaching ten classes a week.
- If you use the clothes for day to day life, including travel to and from class, then that works against a claim, whereas if you change into them specifically for class and change out of them straight away then that makes a claim easier.
- Clothes with your business or studio logo are easier to claim as they are more akin to uniform.
You will need to draw your own conclusions from these broad principles around the appropriateness of claiming clothes in your own circumstances.
How does this stack up ethically? Well, our view would be that given the courts themselves have said its a question of degree, its a case of assessing on an individual basis where you stand on a sliding scale of speciality v everyday use, an act accordingly. There will be some very clear cut cases, but in other instances Asteya and Satya would probably dictate an honest, but individual, personal appraisal.
