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mobile phone purchase - company contract/handset

limited company - allowable expense mobile phone

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Hello, I am a director in a limited company and need to upgrade my phone to be more fit for purpose for business use. The phone will be business use with reasonable private usage.

I would like to purchase a mobile phone via the limited company as I understand HMRC allow an exemption for each director to have a mobile phone. 

I will pay for the standalone handset with my personal funds as the business does not have any cash yet. 

My current personal sim-only contract provider will allow me to change the name of the contract to the ltd company without having a business contract - I will pay for the contract from personal funds for the same reason as above until I can fund it through the company. 

Will HMRC have an issue with this from a BIK perspective?

Is it correct that it would be an allowable expense for CT, and if the ltd co VAT registered I can reclaim the input VAT?

Replies (7)

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By MattS
28th Oct 2021 13:51

You are correct that in most circumstances the provision of one mobile ‘phone to a director or employee for private use is exempt from charge. The exemption covers the phone itself, any line rental and the cost of private calls paid for by the employer on that phone.

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By Paul Crowley
28th Oct 2021 14:18

Contracts need to be in the name of the company

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By Hugo Fair
28th Oct 2021 15:25

And, at the risk of stating the obvious, "if the ltd co VAT registered I can reclaim the input VAT?" is a slightly odd question in the context that "the business does not have any cash yet."
Presumably this means that a) the company hasn't started trading yet, and b) any VAT registration would be voluntary ... in which case see all the other threads about pre-trading claims and the microscope through which HMRC will view your first return.

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Replying to Hugo Fair:
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By accountinggeek1
28th Oct 2021 18:35

Will be voluntarily VAT registered, and company has not started trading yet. My question was more that usually to reclaim VAT the asset needs to be wholly business use but I am asking whether the exemption for mobile phones mixed personal and business use applies for VAT purposes as well as BIK. I could not find a clear answer when I researched online.

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By David Ex
28th Oct 2021 16:34

Meant to ask if you had decided which tax resources you have chosen for your accountancy practice.

https://www.accountingweb.co.uk/any-answers/croner-i

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Replying to David Ex:
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By accountinggeek1
28th Oct 2021 18:32

Hell0 - I went with Ross Martin. I get Bloomsbury with ICAEW and may also join ICPA so would get some of the Tolleys Library. Plan to see how I get on with those at first. Croner came back with a more competitive price but it was still very expensive and the three year term was a deal breaker for me.

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Replying to accountinggeek1:
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By David Ex
28th Oct 2021 20:14

accountinggeek1 wrote:

Hell0 - I went with Ross Martin. I get Bloomsbury with ICAEW and may also join ICPA so would get some of the Tolleys Library. Plan to see how I get on with those at first. Croner came back with a more competitive price but it was still very expensive and the three year term was a deal breaker for me.

I like the look of Ross Martin but I’m not in business so any cost for interest’s sake is prohibitive.

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