Your company can claim tax relief on your mobile phone or telephone expenses, provided the phone is used for business purposes and the service provider bills directly to your company.
Generally, a company can provide a mobile phone to an employee and there should be no obligation on your company to report this to HMRC and the entire expense should be claimed as an allowable expense. If the company is VAT registered, the VAT can also be claimed.
For sole traders, only a business element of the mobile phone or telephone expenses can be claimed. You should work out the business element using
All VAT registered sole traders should deduct personal element of the costs before calculating VAT claims.
Frequently Asked Questions:
Should I buy phone personally myself or buy through my company?
It is always advisable that you should set up a phone contract between your company and the service provider. The downside can be that some business contracts are slightly more expensive than the consumer contracts.
What if I purchase a pay-as-you-go phone in the company name?
If you purchase a pay-as-you-go phone in the company name, you can claim the cost of the handset as an expense.
Can I claim business use for my personal contract?
Although wholly and exclusively business related expenses are allowable, it is difficult to justify additional business costs as the majority of the telephone contracts are bundle packages. Where the additional business costs are clear then it is possible that you can claim the tax relief.
Can company directors claim mobile phone bills as a business expense?
As long as the bills are being paid out of your company bank account and the invoices are in the company name, you can claim the full amount on the bills as a business expense. If your company is VAT registered, you can also claim all the VAT.
Can I claim corporation tax relief for having two mobile phones through my Ltd company?
Yes, you can claim corporation tax relief for two mobile phones through your company. However, the second phone would need to be reported as a benefit in kind as only ONE phone per employee is exempt.
What if I purchase a mobile phone and contract in my personal name?
Purchasing a mobile phone in your personal name means that you cannot claim the cost as a company expense. If you take on a phone contract in your personal name, you will not be able to claim the tariff as a business expense either. However, you should be able to claim the additional costs relating to the business.