Michael Lansdell asks: “Are company mobile phones a benefit worth offering?”
In your practice, you may be thinking about providing some of your employees (or one of your directors) with a mobile phone for them to use for both work and personal calls. In fact, many of us don’t find the idea of keeping two separate phones particularly appealing, and are fine with managing our boundaries.
But, when you tell your employee/director that you won’t simply be paying their bill and costs, and that you will actually own the phone, or be the other party in the contract with the mobile phone provider, they might be worried that they are going to miss out on tax breaks.
So, what’s the deal – is it worth them accepting your offer of a company mobile phone? Or should they just carry on with logging work-related calls as expenses when they come to do their tax return?
The key is in the contract. If you provide a company mobile phone to employees/directors, for the ‘benefits in kind’ exemptions to apply the phone’s contract must be between the business and the phone provider. The exemption will cover the contract and the cost of their calls, whether private or work-related.
Remember that the absolutely crucial element for tax purposes is whether the mobile phone contract is held in the individual’s name. If it is, and the company is reimbursing the costs, only business calls can be claimed as a tax-deductible expense.
Are any charges outside the exemption? Yes, some ‘extras’ will be, for example the cost of downloading certain apps that are not primarily for work. Such items will be taxable. If a call isn’t ‘free’ or included in the contract, there may not be a tax/NICs exemption either, even if they are able to identify that it was for business.
The devil is always in the detail, so small print must always be checked, and contracts reviewed. For example, it is not always easy to clearly identify a business call – plus, plenty of mobile phone contacts offer a number of calls/texts for free every month.
So potentially great for employees... but what about the company?
Are there any negative tax consequences for the business that you should worry about? The good news is that if you’re the practice owner, whether the business pays the mobile phone costs direct or reimburses the employee/director, it is still entitled to claim a corporation tax deduction.
So, could the humble mobile phone actually be a way of saving both you and your valued employees or company director(s) money? Yes, as long as you check the numbers, read the small print and know the rules – in other words do your homework.
With remote working continuing for now, at least in some sectors, if you are not already providing a company mobile for your staff, it could certainly be something to think about. If they are wary about losing tax benefits or are not convinced about the benefits of not being the name on the contract, you can reassure them of all the advantages not just to them, but also to the company.
To avoid any pitfalls, and for all other kind of canny tax-saving tips, give specialist dental accountants Figurit a call. For many years we have been helping dental clients optimise their business and personal finances. No matter the size of your practice, we will have creative and compliant ways to maximise your tax efficiency and run a profitable and happy business.
For more information, visit https://figurit.com or call 020 7376 9333.