TLC loves saving money on company mobile phones

So how do mobile phones provided to employees/directors qualify for the tax exemption?

A mobile paid for by the company is a benefit in kind, and generally a good one as if you get it right it’s tax free (and we all like tax free perks!).

But remember for this particular benefit to be considered tax free in your hands, as an employee/director, there are certain conditions that must be covered to keep HMRC happy:

  • the contract for the phone must be in the name of the employer (so the company) and not the employees’ name
  • the phone must be provided by the employer (company) so that the handset belongs to the company technically
  • the employee can only benefit from this exemption for one mobile phone

Employer issues (what the company needs to consider)

Many employers are still not meeting these conditions and a tax liability could arise if you’re not careful.

If the mobile phone contract is held in the name of the employee (director) rather than in the employing company’s name then it is only really possible for itemised business calls to be paid by the company without any tax implications. The costs relating to line rental and private calls may be deemed to form a taxable benefit with income tax and national insurance implications. It is therefore really important to ensure that any contracts are in the company name and payment arrangements such as direct debits should really only be made by the company as the contract is in its name too.

So get your mobile switched to a company one as soon as possible, speak to Claire about other options if you are tied into a contract.

Remember the exemption is generally for one mobile phone – the rules mean you are only allowed one mobile for personal use on a tax free basis, (except if you own a second mobile and it is only used for business purposes, for example if it is kept in the office), then this would not be taxable.

So what about mobile phones for other family members?

Unless the family member is also an employee or director of the same business the phone provided to them will not qualify for the exemption, but provided they are a company provided phone for them makes sense!

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