Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.
What counts as providing a mobile phone?
If you are an employer and you provide members of your staff with mobile phones, you may need to report this to HMRC and as a result there might be extra PAYE tax and National Insurance to pay. As far as HMRC is concerned, providing a mobile phone to your employees includes the picking up the costs for the phones you provide to your employees as well as reimbursing them for the costs of their own mobile phones.
This also includes providing smartphones to your employees. Even though the capabilities of modern smartphones are far greater than just allowing employees to make and receive phone calls, as far as HMRC is concerned they still count as a mobile phone as opposed to a PDA (personal digital assistant – also known as a palmtop computer or handheld device).
Are there any exemptions?
You don’t need to report anything to HMRC or make any PAYE tax or National Insurance deductions as long as you only provide your employee with one mobile phone or SIM card, and the phone contract is between you the employer and the phone supplier. Both of these conditions need to apply for the exemption to be valid.
If the mobile phone costs form part of a salary sacrifice arrangement, these will need to be reported to HMRC.
How do you report to HMRC and pay?
If the phone costs aren’t exempt, you will need to report these to HMRC and there may be additional PAYE tax and National Insurance to be deducted and paid. If the mobile phone costs are covered by an exemption, you won’t need to include them in any end-of-year reporting to HMRC.
If you provide more than one phone to your employee, one of those phones will be considered to be exempt but the other phone or phones will be considered to be assets and will need to be reported to HMRC.
If your employee arranges the phone and you pay the supplier directly, you need to report this on your P11D and pay Class 1 National Insurance through your payroll.
If you reimburse your employee for using their own mobile phone for business purposes, what you need to report all depends on which part of their mobile phone bill you are reimbursing. If you only reimburse the monthly phone tariff, you will need to deduct and pay PAYE tax and National Insurance through payroll but you won’t need to report this to HMRC. If you pick up the costs for their private call charges over the monthly tariff, you need to deduct and pay PAYE tax and National Insurance through payroll but again, you won’t need to report this to HMRC. If you pick up the costs of their business call charges, you need to report the amount on your P11D form but there is no additional tax or National Insurance to deduct and pay.
If your employee has a Pay As You Go (PAYG) mobile and you reimburse them for the costs of their business calls, you need to report the amount you reimburse them on your P11D form but there’s no additional tax or National Insurance to pay.
How do you work out the value?
The value of the benefit to report to HMRC or pay additional tax or National Insurance all depends on who arranges and pays for the mobile, and whether you are picking up the costs for business or personal calls.
- If your employee arranges the phone but you pay the supplier or reimburse your employee, the amount you need to put through payroll should be the amount of the monthly tariff you reimburse them plus the cost of any private call use above the tariff (if you also reimburse these costs). You need to report the cost of any business calls above the monthly tariff that you pay for.
- If your employee has a PAYG phone and you pay for their business calls, the amount you report is the cost of the calls you reimburse or the amount you give to your employee to top up their phone.
If the mobile phone costs are part of a salary sacrifice arrangement and the amount of salary given up is greater than the value of the phone costs, you need to report the salary amount to HMRC. This only applies to salary sacrifice arrangements made after 6th April 2017.
How can DSR Tax Claims help?
We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.