HMRC now accept 'smartphones' qualify as 'mobile phones'

[northernladuk]

Alan,

So for smartphones that have already gone through the books as computer equipment (or whatever the category is - I can't remember off the top of my head). Can any adjustments now be made, i.e. presumably my iPhone is listed as an asset, so can that asset reclassified as an expense?

Cheers.

There is a long thread on handsets as assets or expenses here

http://forums.contractoruk.com/accou...t-expense.html

Upshot appears to be if it is under £500 it would be treated as an expense. HTH

[Lewis]

There is a long thread on handsets as assets or expenses here

http://forums.contractoruk.com/accou...t-expense.html

Upshot appears to be if it is under £500 it would be treated as an expense. HTH

I think my iPhone went through the books last year as an asset - if it is now an allowed expense, then can I retrospectively reclassify it as an expense? i.e. wipe the asset value from my books. That will allow me to take the asset value out of the company as a dividend. It's obviously not a big deal financially, just a thought that occurred to me when reading. Have pinged a mail to my accountant...

[Nixon Williams]

I think my iPhone went through the books last year as an asset - if it is now an allowed expense, then can I retrospectively reclassify it as an expense? i.e. wipe the asset value from my books. That will allow me to take the asset value out of the company as a dividend. It's obviously not a big deal financially, just a thought that occurred to me when reading. Have pinged a mail to my accountant...

Lewis

Generally, if the phone was in excess of £500 then we would usually treat it as an asset. There is no hard and fast rule on this level, it is just the cut off we use and I believe quite a few other accountants do the same.

If the phone has been treated as an asset, then it is not practical to 'reassign' the treatment as capital allowances will have been claimed etc.

The tax effect would be the same, in that either way, 100% tax relief would have been obtained.

You are correct that it has an impact on the balance sheet, but by treating the phone as an asset, this effectively produces more available profit and so more dividends being available.

What you are possibly referring to is that by 'investing' some of the profits in assets, this in reality restricts the cash that is available to actually pay a dividend.

So, say you have retained profits of £200K and decide to buy a house to rent out (through the company), whilst you still have retained profits, you no longer have the cash, as you have invested it in property.

However the amounts you are talking about are so small that this will not have any real impact on the dividends that can be paid.

I hope this helps.

Alan

[escapeUK]

However the amounts you are talking about are so small that this will not have any real impact

I think this summed up the whole thread really.

[Wanderer]

I just bought a new phone last week with my own cash (£400, sim-free).
Would be could if i could make this an expense to the company.

Sure, just put the purchase of the handset through as a business expense and reimburse yourself from the company account as you would do with any expense paid out of your own pocket. (I presume you have some proof of purchase)

As for paying for calls, it doesn't matter that the phone is mostly used for personal calls, provided the contract is in the company name it's allowable - no questions asked. PAYG is allowable if it's for identifiable business calls only so you are better off going with a contract in the company name.

Read all about it here: HMRC Telephones - mobile

[redgiant]

I claimed my smartphone as an expense when I purchased it last year. I'm glad this grey area has been cleared up finally.

[Lewis]

I hope this helps.

Yes, thanks Alan.

[blinko]

About time they changed this, you can barely buy a handset these days without it having internet access or being a touch screen (Which I hate, buttons all the way please)

[Boo]

What would the view be if I buy a SIM free device through the company, but not claim for line rental/calls as my device is mainly used for personal calls.

Whether the phone is used for business or pleasure use is entirely immaterial : HMRC have decided that one phone per employee (including the contract time) is not a taxable benefit regardless of use. Strange and unexpected but true

Boo

[ronanm]

Whether the phone is used for business or pleasure use is entirely immaterial : HMRC have decided that one phone per employee (including the contract time) is not a taxable benefit regardless of use. Strange and unexpected but true

Boo

My accountant advises:

"that provided that your company provides you with just one phone, that the contract is in the company name and that the monthly payments are made from the company bank account, then HMRC will accept this with no extra tax liability on either the employer or the employee. However you need to make sure that the phone is wholly, exclusively and necessarily used for the business only."