If you reimburse your employee's mobile phone expenses you could be providing them with a taxable benefit which could be subject to tax and NI.
There is only one instance where the provision of a mobile phone is not reportable as a taxable benefit so it is worth reviewing how you treat mobile phone use in your business.
- If the mobile phone contract is the employee's name but you pay the supplier direct this is a taxable benefit and must be reported on a P11D. Class 1A National Insurance will be payable by you, the employer.
- If you reimburse the employee for their monthly tariff tax and NI is payable through the payroll for the amount of the reimbursement.
- If you reimburse the employee for their private phone calls tax and NI is payable through the payroll for the amount of the monthly reimbursement.
- If you reimburse the employee for business calls on their personal mobile phone, this must be reported on a P11D annually but no tax or NI is due.
- If you provide your employee with one mobile phone and the contract is between you and the supplier there is no taxable benefit. Neither you nor your employee will have to pay tax, NI or Class 1A NI on this benefit, unless the phone is provided under a salary sacrifice arrangement. If you provide more than one phone, the additional phones will be classed as a benefit and be subject to tax and NI.
For further information on the provision of mobile phones or reimbursement of the costs to an employee visit HMRC Expenses and Benefits.
