Expenses and benefits: mobile phones
What to report and pay
If telephone expenses are not exempt, you must report them to HM Revenue and Customs (HMRC) and may have to deduct and pay tax and National Insurance on them.
Some mobile phone expenses are covered by exemptions (which have replaced dispensations). This means you will not have to include them in your end-of-year reports.
If you provide more than one phone to an employee
One of the phones is exempt from paying and reporting, but any other phones count as assets.
If your employee arranges the phone but you pay the supplier
You must pay tax and Class 1 National Insurance through payroll.
If your employee uses their own phone and you reimburse them
You do not need to report this on form P11D. You may still have to deduct and pay Class 1 National Insurance and PAYE tax through payroll.
If they have a monthly phone tariff
You must deduct and pay National Insurance and tax if you reimburse the cost of one or both of:
- the monthly phone tariff
- private calls over the limit of the monthly tariff
For any business calls over the limit of the monthly tariff, you do not have to deduct and pay National Insurance or tax.
If they have a ‘pay as you go’ mobile
If you reimburse the employee for business calls, you do not have to deduct and pay any National Insurance or tax.