Mobile telephones
Overview 📞
Employers can provide each employee (including directors) with one mobile phone tax-free, even if there is significant personal use. To qualify for this exemption, two conditions must be met:
- The phone contract must be between the company and the network provider (i.e. a business contract).
- The bills must be addressed to and paid directly by the company.
Common Scenarios & Tax Implications
1. Consumer Contract in Employee’s Name (Paid by Company)
- No exemption applies.
- The company must pay National Insurance on the personal benefit received by the employee.
- Reimbursement strategies are generally impractical.
2. Personal Contract, Used for Business
- Requires an accounting adjustment to claim business use proportionally.
- Example: A £50/month personal contract mostly used for business—80–90% of it could be treated as a business expense, if documented.
3. Business Contract Paid by the Company
- This is optimal: no taxable benefit arises, and no accounting adjustments are needed.
- Most efficient from tax and accounting perspectives!
💡 Key Takeaway
To unlock full tax and accounting benefits, provide mobile phones via company contracts, with bills paid directly by the business.