Did you know that mobile phones are eligible to be provided tax-free to employees? This means that the business gets tax relief while the employee pays no tax on the benefit. Find out more in our video.

What conditions are there?

The conditions of the tax exemption are:

  • The mobile phone must be provided to an employee for their own use by their employer
  • The ownership of the mobile phone cannot be transferred to the employee
  • There must only be one phone or SIM card per employee
  • The exemption covers the use of the phone and the cost of all calls, including private calls, and it also applies to the provision of a SIM card for use in the employee’s own phone.

If the employee is provided with more than one mobile phone or SIM card, then they will be taxed as a benefit in kind and will not be exempt from tax.

Contract between the employer and supplier

The mobile phone tax exemption is only available when the contract is between the employer and the phone supplier.

If the employee takes out the contract with the phone supplier and the employer meets the costs, then the employer is paying a personal bill for the employee rather than providing the employee with the phone.

This is an important factor to determine whether the exemption will be available and the employee suffering a tax hit.

What phones are eligible?

The tax exemption applies to mobile phones and smartphones. To be classified as a phone, the device must be capable of making and receiving voice calls.

You should know that iPads and Tablets do not qualify, even if calls can be made via WhatsApp or similar services.

The fact that a device has a telephone function does not mean that it will qualify as a mobile phone.

What do I need to know about the OpRA rules?

If the mobile phone is given to the employee under a salary sacrifice or another optional remuneration arrangement (known as OpRA) then the exemption will be lost.

 

 

Make sure that you know the rules that apply to be eligible for the mobile phone tax exemption for you and your employees.

If you’d like to know any more, please get in touch with us.

I hope that’s useful. If you’d like to see more videos where we answer lots of questions on tax and accounts, take a look at our YouTube page. You can also subscribe for more videos.