Mobile phone

This is a great tax-free perk that doesn’t need reporting to HMRC for employees and businesses alike so long as the following conditions are met:

• The business provides the employee with only one mobile phone or SIM card
• The phone contract is between the business and the supplier

If you deviate from the above conditions, then it is most likely Income Tax and National Insurance will be due on the value of the mobile phone and call plan/costs.

For example, if your employee submits an expense claim each month for the monthly rental because they have organised and signed the mobile phone agreement then this will not be as tax efficient for you and the employee because it didn’t meet the conditions above.

If you provide more than one phone to an employee

One of the phones is exempt from paying and reporting, but any other phones aren’t.

If your employee arranges the phone but you pay the supplier

You must:

• report the cost on form P11D and pay aver the tax on the value
• pay Class 1 National Insurance through payroll

The employee uses their own phone and you reimburse them

If you only reimburse the monthly phone tariff, deduct and pay Class 1 National Insurance and PAYE tax through payroll. There are no additional reporting requirements.

Private call charges over the monthly phone tariff

Deduct and pay Class 1 National Insurance and PAYE tax through payroll. There are no additional reporting requirements.

Business call charges over the monthly phone tariff

You must report the amount on form P11D. You don’t have to deduct and pay any tax or National Insurance.

Your employee has a ‘pay as you go’ mobile and you reimburse them for business calls

You must report the amount on form P11D. You don’t have to deduct and pay any tax or National Insurance.

Further information can be found at gov.uk