Did you know that providing your employee with a mobile phone could be taxable and therefore could cost your business more than you expect?  If you provide a mobile phone are you paying for it in the most tax efficient way?

Here are the ways providing a mobile phone is either taxable or non taxable.

  • You can provide an employee with a mobile phone for business and personal use and, as long as the contract is with your company, there are no tax or NI implications.
  • If you pay the provider of your employee’s mobile phone and the contract is in the employee’s name the value of the payment you make must be put through the payroll and NICs paid by both the employee and the employer.  The total amount paid over the year must also be declared on a P11D. 
  • If you reimburse your employee for their mobile phone tariff the amount you reimburse must be added to their gross pay and will be subject to tax and national insurance contributions.  If you reimburse the cost of calls in excess of the monthly tariff the value of personal calls must be added to gross pay, but the value of business calls must be declared on a P11D.
  •  If you “top up” an employee’s mobile phone for business calls only you must report this on a P11D.  There is no tax or NI to pay unless you reimburse the employee for non-business calls.

These rules apply to mobile phones and not to other devices which would use the internet to make telephone calls.

A P11D is a submission of Expenses and Benefits received during the year which is completed by the Employer for each employee who has received benefits which may be taxable.

Further information can be found on the HMRC website - search for Expenses and Benefits A-Z and then Mobile Phones.