Company has an employee to whom it pays £20 per month as reimbursement of mobile phone costs incurred.
The mobile phone contract is in the name of the employee.
Assuming the £20 represents the cost of business related calls made on the employee's personally owned mobile, I assume that this amount does not have to be taxed or NI'd through payroll?
Assuming no relevant dispensation is in place, I assume the £20 per month should be reported by the company on form P11D and the employee should claim tax relief of the same amount through his self assessment tax return (on the employment page).
As mobile contracts usually include unlimited calls/texts/data in a fixed monthly price, what proof would HMRC require that £20 is a fair representation of business calls made?
Thanks in advance for any guidance on the above!
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No
It is a round sum allowance. It is just pay. It does go through payroll. There is PAYE and NI.
The employee can then make a claim for the actual business expenditure incurred.
If there are no actual charges for business calls, there is no actual business expenditure to claim.
Worst way of doing things.
So
Thanks Portia
So the business calls have to be itemised and so clearly identifiable before they can be classed as such and therefore claimable by the employee?
Otherwise any amounts paid to him will be classed as round sum allowances, even if the amounts vary each month?
https://www.gov.uk/expenses-and-benefits-mobile-phones/what-to-report-and-pay I always think of it that my place of work pays for all my bills indirectly. They pay me, I pay my bank for my mortgage etc. Therefore, if you just sidestep that step of paying me, and the company paid my bank then the tax treatment would be exactly the same. Similar to the phone bill here - although albeit there is an element of private and business. Although the tariff cost - unless pay as you go - would be the same if used 50% of the time for business or 0% of the time for business, therefore treated essentially as pay - the only exemption if it is 100% business use, which I think is unlikely. I would seriously recommend them getting a business tariff in the company name, no BIK implications, no payroll implications and the company could recover the VAT (if VAT registered). 100 more easier.