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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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Class 1 NICs: Expenses and allowances: Telephone expenses: Position where the subscriber is neither the employee nor the employer

An employer may require an employee to have access to a home telephone because it is needed for business purposes (for example, the employee may be the contact for the police in the event that the burglar alarm sounds at the employer’s premises). In view of this the employer may wish to pay the rental charges as well as the cost of any business calls.

Employer pays the rental charges to the employee

If the employer pays the rental charges to the employee this is an additional payment of earnings to the employee. It will therefore satisfy the requirements of sections 3(1) and 6(1) of the Social Security Contributions and Benefits Act 1992 and Class 1 NICs will be due.

See NIM02010 and NIM02015 for guidance on the meaning of “earnings” and liability for Class 1 NICs.

Employer pays the rental charges direct to the telephone company or to the subscriber

If the employer pays the bill by sending payment direct to the telephone company or by paying the rental charges to the family member, etc. (whoever is the subscriber) this will still constitute a payment of earnings for the purposes of section 6(1) if the employee can be held to have received a benefit. Generally, it should be possible to hold that the employee has received a benefit as a result of the employer paying the bill, because if the employer did not pay then the employee might have been called upon to meet all, or at least some, of the cost.

See NIM06215 where the telephone line was installed solely for business use.