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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Particular benefits: supplies and services provided other than on the employer's premises: employer subscribes for telephone line in the employee's home

Section 316 ITEPA 2003

Telephone lines

Some benefits that are work related supplies and services, provided other than on the employer’s premises, are exempt from tax (see EIM21611). This exemption will apply to a telephone line in the employee’s home, for which the employer is the subscriber, if:

  • there is a clear business need for the employer to provide the employee with a telephone, for instance if making and receiving telephone calls from the home are vital and central parts of the employee’s duties and
  • the employer has procedures to monitor, control and minimise the cost to him of private use and
  • the employer has no intention of rewarding the employee.

The employer may control and minimise the cost to him of private use by either:

  • recovering from the employee the cost of private calls or
  • ensuring that the cost of any private calls is kept to a minimum, for instance only allowing the employee to make local or off peak calls in clearly defined circumstances.

If the first bullet applies only the benefit of the telephone line will be exempt under Section 316 ITEPA 2003. The benefit of the calls, both business and private will not be exempt, although the amount the employee makes good (see EIM21120) in respect of the private calls will reduce the cash equivalent of the benefit (see EIM21101) and the employee may claim a deduction for calls made in the performance of his duties (see EIM32490). Alternatively, if the business calls are covered by a dispensation (see EIM30051) and the full cost of private calls is made good by the employee, there is no need to report a benefit on Form P11D or to claim a deduction.

If the second bullet applies both the line and the calls may be exempt if the cost of private calls is not significant compared to the total costs of the line and calls.

See EIM21616 for examples of employments where the benefit of a telephone line is likely to be exempt under Section 316.