Mobile phone

Conditions

• Sole traders claim the business proportion of a personal phone bill.
• A limited company can provide one mobile phone per director or employee under a company contract, which can be free of a benefit-in-kind charge if the contract is in the company's name.
• If the phone contract is in the employee's or director's name but the company pays the supplier directly, the cost must be reported on form P11D and Class 1 National Insurance is payable through payroll.
• If the employee or director pays their own phone bill and the company reimburses them, it is not reported on P11D, but Class 1 National Insurance and PAYE tax may still be due through payroll — depending on whether the reimbursement covers the monthly tariff and private calls (taxable) or only business calls (not taxable).
• Salary sacrifice arrangements involving a mobile phone always require reporting, even if the phone would otherwise qualify for the single-phone exemption.

Common mistakes

• A company reimbursing a personal phone contract and not realising it can be a taxable benefit.
• Sole traders claiming 100% of a phone that is also used personally.

What to keep

• Phone bills and a reasonable basis for the business proportion.
• Evidence of whose name the contract is in.

Real-world example

A director arranges a mobile contract in the company's name and uses it for business. Provided it is the company contract and limited to one phone, it can usually be provided without a benefit-in-kind charge.

Frequently asked

Related allowances