Paying for iPhone from personal bank account

[Hallam Jones Accounting]

There are many contractors, especially new ones, who have personal mobile phone contracts on their personal names and payments taken from their personal bank account. The best and easiest way to claim for this )if you are unable to change the contract to your Ltd company) is to claim the phone cost as an expense . You may need to make an appropriate apportionment for personal use.

Abbas Shah
Hallam Jones Accountancy

[TheCyclingProgrammer]

. You may need to make an appropriate apportionment for personal use.

Abbas Shah
Hallam Jones Accountancy

If the phone is bought by the company (including if reimbursed employee but the asset is owned by the company), then there is no apportionment, surely? That's the whole point of the "one mobile for mixed use" rule?

[Pondlife]

If the phone is bought by the company (including if reimbursed employee but the asset is owned by the company), then there is no apportionment, surely? That's the whole point of the "one mobile for mixed use" rule?

I think they mean value of the airtime part. Although, is it not more complicated if you have a personal contract at a rate that includes the cost of the phone (which had no upfront cost) over the contract period. Example: I sign a 2yr deal with PhoneCo for a free phone and xGB data for £30 a month. I then go contracting 6 months later. I suppose I could sell the phone to MyCo for the value of a 6mnth old phone and then claim all business calls. Not the simplest.

All this assumes that PhoneCo are unwilling to convert the contract from personal to business.

[unclemohammed]

New contract or PAYG setup

Reading this thread with interest, being a bit of a tight bugger, I am loathed to go down a 2yr contract route for a new phone, but I am a bit unclear on HMRC rules for either:

a) Buying the phone outright, SIM Free, and then using a PAYG system e.g. like GiffG*ff - can I buy the phone and setup the goodybags through my business account? My accountant says definitely not - the phone downpayment and the contract have to be one of the same process to be allowable for CT benefit - when I look at HMRC rules, they are vague. Reading other peoples experiences e.g. here and other websites - it seems it may be allowable? Does anyone whether this can be done with the CT benefit? Essentially the acct. is saying I have to be on a contract. BTW The accountant is a large reputable co. that trawls this website, not some dodgy backwater...

b) Again, buy the phone SIM free and then setup a shorter e.g. 12 month contract through the same company. I am clear the CT benefit would apply to the contract, but I am little unsure on the CT benefit on the downpayment on the phone? Again, all through my biz acct.

Can anyone have any clarification on the above?

[TheCyclingProgrammer]

Your company can pay for the handset without any contract attached to it. You can then either put a business PAYG SIM in it (if such a thing exists) or a business SIM with a 30 day contract - either of these, if in the business name, will be fully allowable expense for CT, as will the handset (unless you treat it as an asset in which case capital allowances apply). You could also put a personal SIM in it - this won't be a tax deductible cost for YourCo, but the handset will and you can claim for any business calls you make from YourCo.

There is nothing in the rules that says the company must also pay for the mobile phone contract in order for the cost of the phone to be allowable. The cost of the phone in isolation is a legitimate company expense but I would recommend getting the invoice for the phone in the company name (essential if you're claiming the VAT anyway).

This is exactly what I do and I believe others on here do too - MyCo always buys the handset outright (I used to capitalise it but don't bother any more, I just put it through as an expense) with the invoice in its name. I then use a personal SIM card in it which I do not expense. All calls are within my allowance (I'm a light user) so I don't bother claiming for any business calls (the cost to me is nil in any case).

This is often the cheapest way of buying a phone unless you're a heavy user as even when considering the tax saving, personal plans can be a lot cheaper than business plans. The biggest saving is on the cost of the handset itself - not only is it cheaper as its not subsidised, but it reduces your CT bill and if you're on the standard VAT scheme you can also reclaim the VAT (pretty sure no apportionment is necessary even if the handset is used for personal use).

[tractor]

...

Reading this thread with interest, being a bit of a tight bugger, I am loathed to go down a 2yr contract route for a new phone, but I am a bit unclear on HMRC rules for either:

a) Buying the phone outright, SIM Free, and then using a PAYG system e.g. like GiffG*ff - can I buy the phone and setup the goodybags through my business account? My accountant says definitely not - the phone downpayment and the contract have to be one of the same process to be allowable for CT benefit - when I look at HMRC rules, they are vague. Reading other peoples experiences e.g. here and other websites - it seems it may be allowable? Does anyone whether this can be done with the CT benefit? Essentially the acct. is saying I have to be on a contract. BTW The accountant is a large reputable co. that trawls this website, not some dodgy backwater...

b) Again, buy the phone SIM free and then setup a shorter e.g. 12 month contract through the same company. I am clear the CT benefit would apply to the contract, but I am little unsure on the CT benefit on the downpayment on the phone? Again, all through my biz acct.

Can anyone have any clarification on the above?

What CP said.

[TheCyclingProgrammer]

Just a reference to back up my point, in case poster wants to discuss with their accountant:

You don’t have to report anything to HMRC or deduct and pay tax and National Insurance if both the following apply:

you provide your employee with only 1 mobile phone or SIM card
the phone contract is between you and the supplier

https://www.gov.uk/expenses-and-bene...s/whats-exempt

In short, YourCo could provide just a handset and you provide the SIM, it could provide you with just a business contract SIM that you use in your own existing handset, or it could provide both. Any contract needs to be in the company name and I would ensure any invoice for handset cost is also in company name.

[happyfeet75]

Apologies for thread resurrection - quite paranoid and still unclear on if the company can buy the handset, and what the benefit of doing that would be to me as the company director.

You don’t have to report anything to HMRC or deduct and pay tax and National Insurance if both the following apply:

you provide your employee with only 1 mobile phone or SIM card
the phone contract is between you and the supplier

I asked my accountant if I could expense a handset only through the company, and was told:

You can put the handset as a company expense but this should then be wholly and exclusively for business purpose.

If you purchase a contract this can all be put through the company whether you use it personally or not, providing it is in the company’s name.

I've looked at threads, and can't see the ability to buy a handset via the company, give it to the employee, and allow them to use their own personal SIM - doesn't this implicitly contradict the 'wholly and exclusively for business purposes'?

CP, you say a handset only can be a legitimate company expense, yet you put a personal SIM in it, and use the phone for personal calls. In the above HMRC scenario, wouldn't the business have to have the contract on the SIM, to allow it to be exempt?

How do HMRC check if a handset only, with a personal SIM, is only ever solely used for business? (i.e absolutely zero personal texts, calls, Candy Crush or emails)?

[TheCyclingProgrammer]

IMO, your accountant is wrong. YourCo can provide you with ONE phone (which can be SIM free) for mixed use. The HMRC rules make it clear that any contract must be in the company name but nowhere does it say that YourCo MUST have a contract or provide a SIM.

You still need a SIM/contract for it which can either be:

* In the company name: fully allowable without any BIK
* In your name: you can only claim for business calls

The HMRC rules could be written better but they aren't that unclear. It clearly states YourCo can provide you with one handset OR SIM and any contract must be in YourCo's name. If YourCo simply purchases a handset outright, there is no contract (however I would get an invoice in YourCo's name as it is a company asset).

Its also equally clear that a business can provide its employees with one mobile phone for business and personal use, so its perfectly acceptable to put a personal SIM card in it, you just can't claim for the whole cost of the SIM.

The exemption can apply to just a phone, just a SIM, or both. For instance, its equally acceptable to provide a business SIM (contract in YourCo's name) which you then use in your own personal handset.

The simplest way of summarising this is: if you buy a handset it needs to be in the company's name. If you open a contract, it needs to be in the company's name. If you buy both, they both need to be in the company's name.

[northernladuk]

Just don't expect to be able to give it to your wife/kids/friends if they are not connected to the company