Phones for Employees: If you buy mobile phones to be used by your employees, the first year allowance and vat rules are the same as a phone for yourself. You must remember however, that in some circumstances a phone (as well as hands free car kits and some similar equipment) will be classed as a benefit; and your tax calculations will need to accommodate this. The Phone is Owned by You (The Employer) When the phone remains owned by you, there is no benefit tax charge, and the phone does not need to be recorded on tax form P11D.
The Phone is Owned by the Employee
When the phone is owned by the employee, the recordable benefits vary depending on whether you pay (and how you pay) rent or call costs. The following benefits are based purely on rent/service charges and call costs as the phone has not been paid for by the business.
If you pay the mobile provider for the rent or service charge of an employees phone that is available for business and private use, then Class 1 National Insurance Contributions (NICs) are payable, and it needs to be recorded as a benefit on the form P11D (section B or O).
If you pay (or reimburse the employee) for the rent of an employees phone that is only used for business, then no NICs are payable on the phone, although it will still need recording on form P11D (section B or O).
If you reimburse the employee for the cost of a rent or service charge on a phone that is available for business and private use, then Class 1 NICs are payable, but it does not need to be recorded as a benefit on form P11D.
If you pay the mobile provider, or reimburse the employee for the cost of business calls made on their mobile phone, there no NICs are payable, although it will need to be recorded on form P11D (section B or O).
If you reimburse the employee for the cost of their private calls, then Class 1 NICs are payable, but it does not need to be recorded on form P11D.
If you pay the provider directly for the cost of an employees private calls, then Class 1 NICs are payable, and it needs to be recorded on form P11D (section B, N or O).
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