Sep 7, 2018

Mobile Smart Phones

Andrew Barraclough
written by Andrew Barraclough

Before you sign up to a new phone contract, consider using your business to pay for it.
You’ll get the corporation tax benefit of 19% and if you’re VAT registered, the VAT back!

Applies to:  

  • Any Directors 
  • Any employees  

HMRC has confirmed that a limited company may buy (or enter into a rental contract for) one mobile phone/smartphone (e.g. iphone, blackberry or similar) for each of its employees. The device’s sole purpose should be to allow the Director/employee to perform their job (such as contacting Clients or suppliers).

It may also be used for private use but this should not be significant; its primary purpose is for business use.  

Benefits to you: 

If the criteria above is met, then: 

  • The cost of the device and the cost of the monthly contract is fully allowable against tax for the Limited Company (saving you 19% corporation tax)
  • Any additional costs are also covered – eg a screen cover or a screen repair
  • The VAT is recoverable on all costs
  • There is no benefit in kind for the Director/employee 
  • The employer will no longer need to record smartphones on P11Ds, nor pay Class 1A NICs on the supposed benefits of the mobile phone

 Practicalities: 

  • The contract must be in the name of the Limited Company 
  • The initial purchase and/or monthly payments must come out of the Limited Company’s bank account