Mobile Phone Bills

Mobile Phone Bills

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Hi 

A client started a limited company and I am wondering if he uses a personal mobile phone for the business can he claim this as an expense? Obviously he would need to split its usage between personal and business. The business is VAT registered  - can he reclaim the VAT on the business portion?

Thank you in advance.

Replies (4)

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By pjclar02
10th Nov 2011 13:35

Hello there

The answer, as ever, is "it depends".

If the mobile phone contract is held in the name of the individual, which it sounds a though it is, and he pays the mobile phone company directly and subsequently claims the cost back from the employer, then the cost of the "package" (i.e. line rental, insurance) will be treated as earnings and should be included as income on the payslip to collect PAYE and NIC.  If there are any personal calls made outside of the standard tariff then these too would have to be included through payroll.

If it is a pay-as-you-go phone and he just claims the business calls then there is no requirement to deduct PAYE or NIC. 

In both cases there is a P11d reporting requirement.

If the company pays the mobile phone company directly, the situation is slightly different so please post if you need further detail on this.

VAT is slightly more straightforward, you can recover the appropriate percentage of VAT based on business vs personal use.  If the mobile is used 50% for business and 50% for personal purposes, then 50% of the VAT is recoverable.

Hope this helps

Paul

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By Accountsetc
10th Nov 2011 15:18

thanks Paul - appreciate the answer!

Will they be able to claim tax relief for this on their Self Assessment returns?

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By petersaxton
10th Nov 2011 21:37

Don't do it!

Why mess about like this?

Why not just claim any extra cost (including VAT) of business phone calls against the company?

Remember that if you have a set number of calls free then you can only claim the excess call charges that are for business.

Why not change the contract to the limited company in future?

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By Accountsetc
10th Nov 2011 22:42

Thanks Peter

I have advised clients to change contract into name of company and leave it at that - clean and tidy!

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