Most companies have telephone or mobile expenses, however not all companies are invoiced these expenses in the same way. Some companies are simply invoiced for their telephone or mobile usage and pay accordingly, however some reimburse employees for their mobile bills, and some pay telephone or mobile bills which are addressed to the employee. How these expenses they are accounted for can affect the tax of you and your employees. If you or your employee/s currently have a telephone or mobile bill in your/their own name which is paid through your company, then the following guide will tell you the correct way to treat these expenses in relation to tax.

If the employee uses their own phone and you reimburse them

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

*Please note that where a company mobile phone is provided to an employee, the private use is tax free. You may therefore want to consider having a company mobile phone, instead of one in your own name paid for by the company.

If the company pays for your personal telephone bill

If you have a personal phone bill which is paid for through the company, the call charges on your monthly bills will need to be split out between personal and business and then treated in the following manner:

Private call charges over and above 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

If there is any business use of the phone over the monthly tariff and so itemised on the bill then you will be able to claim a deduction for this on your tax return. You must also report the amount on form P11D. You don’t have to deduct and pay any tax or National Insurance.

Considering this, we recommend that any telephone or mobile bill paid for by the company is readdressed to the company to avoid any of the additional reporting requirements, as listed above.

Please do not hesitate to get in touch with your usual Barnes Roffe team member should you have any questions.

Blog written by Phoebe Arnull