Tax Deductions For Clothes, Hair, Make Up And Personal Care?

Wondering if you can deduct hair makeup or clothes in your business, well watch on as a business accountant. My team and I spent all day long helping business owners on their journey and, as you can imagine, the question around what you can deduct in your business against their tax bill is very, very key part of what we do and ultimately the question around cloves make Up personal care, cosmetic surgery, gym memberships, you know all these things, they're very common wants for people to deduct in their business and particularly if you're in the world of say, like influencing so you're. You know you're on YouTube, you're on Instagram. You run web courses. All these kind of things where I think the natural feeling is, I need to look good for what I do. Can I get a tax deduction on this stuff and actually it's taken years and years of court cases to get some idea of what's likely to be accepted by the revenue, should they check into it, and that is what I want to talk to you about in This video so before I do, if you like these type of videos, make sure to hit the Subscribe button and the bell below so you get notified whenever we release more videos, just like this one. So, firstly bear with me slightly because it is a long one, because we've got a fact that you've got all these different elements and regardless of whether you're an influencer or you're, a painter and decorator. As we're going to hear. There'S going to be something in this video for you so do are just listening. I think it's more. It'S very interesting topic. This one um and I think you'll be hopefully interested in the court cases. I'Ve pulled out as well, so let's, let's get into it. So, let's talk briefly about the basic rules: we've done a couple of videos, podcasts and blogs on this before, but the basic rule is, if anything to be tax deductible in your business's account. It needs to be wholly and exclusively for the use of business um effectively that you know the wordings, trade vocational profession, but it needs to be holding exclusively that's the key, and that sounds like an easy rule. Right should be really straightforward. You go yeah this. Let'S take clothes as the first example this suit that I'm wearing I 100 need to look sharp for work. It'S kind of the accepted Norm in my profession, tax, deduction, yeah. The answer is probably not and it's an established court case, the leading court case, and this goes back to 1983. Actually, lady Barrister wanted a tax deduction, so self-employed lady Barrister wanted a tax deduction for a suit and a wig and some other bits and pieces and what they said was. It was a long long judgment and I think they were very conscious. The fact that what they said in this case meant that they might be opening up a wider sort of national uh Rush on tax deductions for clothing if they, depending which way they're ruled, but what they ultimately said is she couldn't have the suit as a tax Deduction for a business and the reason is it failed to wholly and exclusively test because it also had a dual purpose: it provided warmth and decency to you, as basically as a human being, that sounds kind of obvious, but that is unfortunately the way the way it Is that what they're saying is there's this unescapable motive? Basically, that you, yes, you needed to buy it for work, but you also, you know subconsciously, maybe knew that you needed clothing as a human being and therefore you couldn't avoid it now. It'S since proven it's a lot, not quite as straightforward as that as we'll talk about, but that what the decency thing has carried on for a number of number of years. So that's where we are at the moment. So if it's everyday wardrobe, which was, is the wording in the revenue manuals you're not going to get a tax deduction from for for it generally generally, as we'll talk about so um and the the one I was think sad about, that is, let's say, you're a Painter decorator, you buy everyday joggers from wherever your cheap joggers are gets covered in paint you just lob them away. In the majority cases you're just not going to get that because it's everyday wardrobe, the fact that you use them in that manner is almost irrelevant. You'Ll. Under those caught kind of uh parameters, you can end up in a place where you still need them for warmth and decency and therefore it's going to fail the the whole exclusively test because there's like a dual purpose. So that's the normal sort of standpoint in clothing, but the weird thing about this is in that they went to lengths in the case to say: well, look just because sometimes there's a personal benefit doesn't mean and there's several other court cases that have been leading on This, since doesn't mean that it couldn't be holy exclusively. So the example they use is like a like a nurse's uniform that, in theory, if she was self-employed, nurse or carer could claim that uniform, because it's of a special nature and the ideas the materials may be made differently to be cleanable. You know all that kind of stuff: it's not everyday wardrobe you're not going to wear it out in most cases out and about for some other reasons. So therefore, it's going to be allowable as a tax deduction. So that's where in the revenue manual, so they're then going to say so uniform's okay. So you might hear this thing that people will say in business. You know well go get your stuff embroidered because it becomes uniform and actually that's quite a general line that works. Quite well because, ultimately, it's not everyday wardrobe, then as if it's branded all over the place, with everything sign, written and all the rest of it, so that that's quite a common one you're here and that's because uniform is generally allowable, as is protective equipment. So high Vis jackets say, like still toe caps boots, all those those kind of things that are more like a PPE that those kind of things - and you might think - and this is where it comes back to it, but surely that PPE and that embroidered um. You know uniform is still protecting my warm and decency and, as I say, they were aware of that in these court cases, and they say yes, we are so it is very much the nature of the expenditure, the nature of the job and as we're going to Explore that's going to be quite a big one, so to use that example in another way, then what happened? The other big court case on this in more recent years was there was a lady who was an exotic dancer for a nightclub and she put in tax deductions. In this case, let's talk about the clothes and put in for all of our lingerie, some crazy outfits, really um and uh. Initially, the revenue went nope, based on this warmth and decency argument and all the other things that's well established every day where you can't have it, you could wear the underwear outside of work, we're not gon na. Have it the actually eventually the courts, disagreed and said she could have it because it definitely didn't protect her warmth and decency. That was a big point in the the judge went to say, um and also just the nature of her job. You know it was stage costume effectively. So if we went back to the Barrister, the wig was okay because it was stage costume so stage, costumes generally, okay. So when you're in that entertainment space, if you can prove in evidence that actually look, this is really stage costume. It'S not everyday wardrobe, although you could arguably say that it's possible to wear it, you just in normal terms, you're not going to then you're, far more likely to get a tax deduction. So the the exotic dancer court case was a big one for that and and for some other things we would talk about in a minute. So that's why we're all closed so if his everyday wardrobe or could be perceived as everyday wardrobe, it's unlikely unless your job is a very special nature and you can kind of prove why that would be the case. So, while we're on the subject of the exotic dancer, then let's talk hair and makeup. So that's quite a big one, especially if you're an influencer like that's, can be quite a costly thing, keeping up your appearances and all the rest of its spray. Tans, fake nails, fake lashes and the reason I'm using that is exactly the expenditure that the exotic dancer went for for the tax deduction again initially denied, because clearly you can't remove the nails. Oh, you probably could, but you wouldn't remove the nails after one night's dancing and your hair extensions and leave them. You know in a drawer somewhere and put them back on so Revenue said no look clearly, there's a personal, beneficial you'll look great outside of work. Actually, though, the courts eventually disagreed and said that I think it was about 250 pound a month that this lady was paying on all of her personal care, Tans slashes, hair everything and they said, given her special nature of her job they're effectively. Okay with that expenditure and that, I think surprised a lot of people because they existing court cases and history shows that that's not likely to be a case and a claim that would normally make its way through. But it did so. It is possible if you've got a job and evidence and that I think the biggest point on this was what was she was able to evidence. That was while she did this, that she incurred that expenditure when she stopped She Stopped doing it, and that was quite big, because then it was just evidence again that actually I was only doing it. My primary purpose was to have it this whole in exclusively for business and yeah. Okay, I can't take him off, but you know it's a minor benefit and again several court cases have said that that they are they they just because it has got some private benefit. Doesn'T mean it's a total no-go, but they do have to weigh up on all the different facts, so that was quite big but generally um you putting your hair cut through. Let'S just say you, you you're an accountant and not that my haircut costs a lot of money, as you can imagine, but if I put mine through all the time uh, I'm not going to get a claim for it. It'S clearly. I'Ve got no special nature. That'S different to anybody else of my job to to need that um. Yes, I need to look smart, but you know that's it so um. So it's not generally going to work, but if you're in the influencer space, let's say you did um get a photo shoot and you had a stylist and a makeup person out for that day. To do it, that's much much more likely to do because it's for one event, it's a temporary thing. You know you've got a whole business reason to do it. Yeah, okay, your your makeup might last the rest of the day or something but again it's it's not to that degree. You can see you can see where I'm going with this right, so um so record that now and that kind of and that's how those kind of things work, and it's the same with uh upkeep of you personally gym memberships and they're, like you very rarely. Do you see a gym membership and things like that be allowable oddly in a limited company you can pay for them, but there's like a taxable benefit to it. So I don't want to get too deep deep into that, but limited companies can generally pay for stuff. But it's just whether they're, whether it's worth it because of all the rules that go in it and what we're talking about here is trying to get a tax deduction. That'S that's good for you! So um, it's a good example. This was a stunt man. So start a leading case with a stunt man a few years ago, very pertinent to us, because we've got stuntman on the books um, he had a load of items. You know gym memberships, all these nutrition and all ongoing things. They were basically disallowed those they said. Well, no for us they're, two Dual Purpose: they're gon na have a big personal impact, but they did allow him um the he did a knee injury and they could, through documented evidence, could see that he needed that. Obviously, that knee repaired to be able to carry on work in and it was done on set and all the rest of it. So they allowed the operation and they allowed kind of the Aftercare of that knee injury, which again was quite a big, controversial piece when it came in because again going back in history. It wouldn't look like that was possible, but it's exactly the same as the exotic dancer. The judge believed in that particular case. They had a special. Their job was basically of a special nature and character. That meant that it was understandable that the primary kind of purpose of that expenditure was to be holding exclusively and yes, obviously having a decent knee, is going to have some private benefit, but based on all these other cases where they said that doesn't stop you from From claiming it was, it was okay, but he did get a lot of other stuff disallowed. So you know if it was nutritional plans - and you know it's not like he's putting for his protein bars every day or anything like this, so they wouldn't be allowed and there was expenditure of similar nature in court cases, whether that's been the case so um. So there we are so medical expenses are similar, so you might think that you need them and again, if you've got a special type of job, he might be okay. Now, when we talk about medical, let's talk then about Cosmetics, so uh Botox dental work. Other types of cosmetic surgery, what is actually the deal and again in the majority of cases you're not going to get um those allowable and the reason being, is that for all the reasons it's going to fail on that Dual Purpose that you, basically you can't take Them out they're all going to look good overall and you'll. You know if you want to enhance your look as an individual they're, not holding exclusively for the use of business. However, the revenue manuals have a little gem in there, which was used actually quote back to them in the exotic dancer case, and it says that if you had an example of a radio presenter, who's been in radio, all their life wants to go. Do TV work and they've been told, it was evidenced that actually their t for wonky and they needed to get them fixed, because that would give them more opportunities to go and work. They are saying that if that was evidenced - and that was possible - they would allow that as a cost. So it's not like it's a complete no-go, but you really have to have evidence sort of story that demonstrates why you absolutely needed it, and also in this example that person had been content with their their look. You know they'd never tried this before it wasn't like upkeep of something they already had in place. You know this kind of stuff, so it was a real business purpose of do this, get more work so and then there's still arguments even around that, but, as you can see, it is potentially possible for the majority of people say like part-time influencers. You put your Botox through, is not going to be, for the majority of vast majority of people is not going to work, because you know you can't take it out and they're. You know if you're, especially if you've done it already and all these kind of things, but it's not to say it's not possible because in certain instances I'm sure that you could argue it and it's the same thing. I think what I want you to take away. This from this video is, you can see a lot of the time, you're not actually going to be able to claim for these things, but if you do feel very strongly that you're job is of that special character in nature that dictates these costs need to exist. Is worth having a look about it, but do understand that you need evidence and it is a very gray area and that if you are inspected, you might well have to stand your ground and argue and prove what you think. This is the case um because it is a very interesting area, so there you go. Hopefully, if you have got one of those self-employed, trades or businesses, where you have got that special character to it - and you do have these types of expenditure, there's some tips in there to see the type of things so, whether that be extreme makeup costume or actually It'S personal care which you think could be claimable, have a look, do your research and, if in any doubt of course, speak to professional about what their opinion is and go from there, but as always with tax law. It is based on opinion, and you have to take all the different facts and say you're on balance. We think this is okay or we don't think is okay and you could probably pick three four accountants in a room and they'd all have a debate over it. So really interesting topic from our point of view, but hopefully that's giving you some insight into it. If you like these type of videos, please share it with someone that you know needs to know this information because they don't teach you at school, and I see the next one.