HMRC allows a limited company to provide its staff / directors with one smartphone each.
So where does that leave you if you already have a business phone but the contract is in your own name?
You can actually get in touch with your mobile phone provider and ask them to transfer the contract to your limited company – however, be careful when transferring the contract that you understand any changes to the prices as the mobile providers will often charge different rates for business and personal contracts.
An alternative is to take out a new business contract.
As an employer providing mobile phones to employees, Ltd Company has certain tax, National Insurance and reporting obligations.
This includes:
- costs for phones company provide to employees
- reimbursing employee’s own phone costs
Reporting Exemption
Ltd Company doesn’t have to report anything to HM Revenue and Customs (HMRC) or deduct and pay tax and National Insurance if both the following apply:
- Company provide employee with only one mobile phone or SIM card
- the phone contract is between Ltd company and the supplier
Reporting Requirement
If telephone expenses aren’t exempt, you must report them to HM Revenue and Customs (HMRC) and may have to deduct and pay tax and National Insurance on them.
Some mobile phone expenses are covered by exemptions (which have replaced dispensations). This means you won’t have to include them in your end-of-year reports.
More than one phone?
One of the phones is exempt from paying and reporting, but any other phones count as assets.
If your employee arranges the phone but company pay the supplier
You must:
- report the cost on form P11D
- 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.
If you want to know more about Limited company’s eligible expenses, please do not hesitate to contact us.