Category Archives: BlackBerry

Business Mobile vs Personal Mobile – tax free benefits

BLACKBERRY-Gemini 8250Many new business owners and entrepreneurs fail to realise the benefits of having a business mobile phone for work purposes. The majority of people think that using their own personal mobile for business calls will be sufficient for them to get the company to foot the bill. In truth, the law governing this area means that such people may well find themselves subject to national insurance and income tax contribution demands as the phone bill is seen as a payment of expenses and thus a “taxable benefit“. A company mobile on the other hand is deemed to be a tax-free benefit.

This is covered by Section 319 of the Income Tax (Earning and Pensions) Act 2003 and the Finance Act 2006 which state that:

(1) No liability to income tax arises by virtue of Chapter 10 of Part …in respect of the provision for an employee or a member of the employee’s family or household of a mobile telephone without any transfer of property in it.

The condition being that any personal use of the business mobile is not “significant”.

The HMRC has some specific guidance on the subject:

In most circumstances the provision of one mobile ‘phone to a director or employee for private use is exempt from charge. The exemption covers the phone itself, any line rental and the cost of private calls paid for by the employer on that phone.

The exemption for mobile phones in Section 319 was substantially amended by Finance Act 2006. For a brief summary of the changes see EIM21778.

So it’s clear that having a business mobile phone is preferable for new company owners, as it is far more tax efficient and reduces personal costs overall.