Mobile phone & contract - Personal vs Business

[zonkkk]

The business deals for mobile phones on contract are more expensive than personal ones (even when you account for VAT and corporation tax saving).

Are there any options to have a personal contract and have the company pay for it (e.g. through expenses - so you get VAT back and the corporation tax saving) without any other tax implications?

[radish2008]

The business deals for mobile phones on contract are more expensive than personal ones (even when you account for VAT and corporation tax saving).

Are there any options to have a personal contract and have the company pay for it (e.g. through expenses - so you get VAT back and the corporation tax saving) without any other tax implications?

The view of my previous accountant has always been that you can claim a personal mobile contract as an expense. HMRC is never going to go through a £20 a month deal and filter business and personal calls.

[NCOTBAC]

https://forums.contractoruk.com/showthread.php?t=121468

[Lance]

whilst not strictly the way you should do it....

1) get yourco paying the bill by direct debit,
2) change the billing address to include the company name

A cursory inspection to that and it looks like a genuine business contract. Someone would have to read the contract to find out it's a personal one. And you don't have to keep a copy of that original document after 6 years.


IANAL

[TheCyclingProgrammer]

The view of my previous accountant has always been that you can claim a personal mobile contract as an expense.

Not unless it's in the company name; if an director/employee contracts with the provider and is reimbursed, it's a taxable BIK:

https://www.gov.uk/expenses-and-bene...report-and-pay

If your employee arranges the phone but you pay the supplier
You must:

report the cost on form P11D
pay Class 1 National Insurance through payroll

https://www.gov.uk/expenses-and-bene...-out-the-value

Your employee arranges the phone but you pay the supplier or reimburse them
The amount to put through payroll is the amount of monthly tariff you reimburse, plus the cost of any private calls above the tariff if you reimburse these as well.

The amount you should report is the cost of any business calls you reimburse that are on top of the monthly tariff.

This is called the pecuniary liability principle:
https://www.gov.uk/hmrc-internal-man...anual/eim00580

Getting the billing address changed to YourCo and paying directly from the company as suggested above *may* pass inspection at a glance but probably wouldn't stand up to scrutiny from a particularly officious inspector if it ever came to that - the contract (and therefore the liability to pay the bill) is still between you personally and the provider. I'd also question whether or not it would stand up to a VAT inspection as well.

It's your choice, but there are plenty of cheap business deals out there. I have a business Virgin Mobile SIM and business broadband account - I get a £5/month discount on the latter for 24 months as I took out the mobile SIM and the SIM itself is only £15 + VAT a month for more data, minutes and texts than I could ever need.

Yes you can get personal deals cheaper than £15/month (or even £12/month if you account for the CT saving) but if you are paying for a plan that cheap, are you really fussed about saving £10-20/year in tax?

[zonkkk]

Yes you can get personal deals cheaper than £15/month (or even £12/month if you account for the CT saving) but if you are paying for a plan that cheap, are you really fussed about saving £10-20/year in tax?

I was looking at saving VAT + corporation tax on £35/month (personal deals) as opposed to £55/month (business deals)
That works out a saving of roughly £20/month (£480 / 24 months contract) (assuming there is a way to save on VAT and corporation tax on the personal contract).

While it is not much, it gives me a sense of enormous well being (you know, like that guy that feeds the pigeons and sparrows in the park(life)). :-)

I guess the best way forward is to buy the phone out right on the business, and then get a personal cheap monthly mobile plan to suit my needs.

Thank you all for your replies.

[radish2008]

Not unless it's in the company name; if an director/employee contracts with the provider and is reimbursed, it's a taxable BIK:

https://www.gov.uk/expenses-and-bene...report-and-pay

What's exempt ?

You don’t have to report anything to HM Revenue and Customs (HMRC) or deduct and pay tax and National Insurance if both the following apply:
you provide your employee with only one mobile phone or SIM card
the phone contract is between you and the supplier

Wouldn't we all satisfy the exemption ?

I don't actually claim anyway so don't really care.

[TheCyclingProgrammer]

Wouldn't we all satisfy the exemption ?

Only if the contract is between YourCo and the supplier, as it says.

[TheCyclingProgrammer]

I guess the best way forward is to buy the phone out right on the business, and then get a personal cheap monthly mobile plan to suit my needs..

Also a reasonable option - you can still claim for any additional business call costs if needed and I did this for years until I found the Virgin Mobile deal. I'm paying the same amount now (ex. VAT) as I was on my previous personal contract with Three.