Reply to: Mobile for company secretary

[Lewis]

Good luck to you if this is the case.

I have to say it sounds completely illogical - why would an employee be given something by a company for personal use that is not treated and taxed as a benefit?

I only came across it because it is listed as number 74 in the document "101 Tax Tips" downloadable from the SJD Accountancy web site. So I dug around some more to get clarification and it just seems to be an allowable 'perk'. Maybe Simon from SJD can add something to the debate if he is reading this.

[opc]

Well nobody seems very interested in this thread but for the benefit of people searching in the future. I have spoken to a specialist tax advisor (via helpline available to me as part of my IR35 insurance) and I have been told it is perfectly fine for all employees (wife or not) to have one mobile phone for personal use provided by the company.

Good luck to you if this is the case.

I have to say it sounds completely illogical - why would an employee be given something by a company for personal use that is not treated and taxed as a benefit?

[Lewis]

Does you wife recieve both a salary and dividends ?

In order for her to be deemed an employee she needs to be salaried, which entails paying additional PAYE on whatever salary you pay.

She is paid £5K per year for being company secretary and maintaining books etc... below ET and above LEL. (so no NI or tax paid). Is that an issue?

(at present she is not paid dividends but that may change after Artic case outcome)

[ASB]

Does you wife recieve both a salary and dividends ?

In order for her to be deemed an employee she needs to be salaried, which entails paying additional PAYE on whatever salary you pay.

An employee does not have to be salaried.

Indeed paying no salary to sombody who is not a director and only providing with benefits (total value < 8,500 p.a.) can be a useful strategy since they are not taxed anyway due to the specific rules.

I doubt many actually do it because it does wave a big red come and get me flag and it does tend to cause certain interest to be raised by the inspector in the subsequent inspection, but it can be done.

[Bluebird]

Well nobody seems very interested in this thread but for the benefit of people searching in the future. I have spoken to a specialist tax advisor (via helpline available to me as part of my IR35 insurance) and I have been told it is perfectly fine for all employees (wife or not) to have one mobile phone for personal use provided by the company.

Does you wife recieve both a salary and dividends ?

In order for her to be deemed an employee she needs to be salaried, which entails paying additional PAYE on whatever salary you pay.

[Lewis]

Well nobody seems very interested in this thread but for the benefit of people searching in the future. I have spoken to a specialist tax advisor (via helpline available to me as part of my IR35 insurance) and I have been told it is perfectly fine for all employees (wife or not) to have one mobile phone for personal use provided by the company.

[Lewis]

Ok, I found this on an HMRC document

"There is no limit to the number of mobile phones that may be provided NICs free solely for business use and on which private use is not significant. Only one mobile phone per employee may be provided NICs free for private use. No mobile phone may be provided NICs free to a member of an employee's family or household. See Employment Income Manual at EIM21778."

http://www.hmrc.gov.uk/guidance/cwg5.pdf

I don't want to say Nixon Williams are incorrect in saying you need to justify business use but I cannot see anywhere where an employee (Co. Sec or not) needs to justify one mobile provided by the company for personal use. The only possible problem is that my wife is both an employee and related but I assume her employee status overrules the 'family or household' exclusion.

I'd welcome an opinion from an accountant as I just want to be sure about the Nixon Williams post and that I haven't missed something.

Thanks as always ...

[Lewis]

is it worth all the hassle for a few quid more. Spend more time working out how to increase your rate then trying to squeeze out a few pence here and there.

You get better UK based customer service and other benefits by being a business customers of T-Mobile.

Quote "I have an account manager there who's an actual person with a name, a direct line and an email address - it's like being in some sort of parallel dimension after banging my head against call centres as an ordinary peon for years."

http://forums.contractoruk.com/threa...10-mobile.html

It's not all about money.

[Lewis]

Can you identify an accountant's post that said otherwise?

4th post down by Nixon Williams
http://forums.contractoruk.com/threa...10-mobile.html

[ASB]

He cannot argue that she doesn't deserve it because that is not relevant from the rules.

The argument the taxman might put forward is that it is a second phone for you provided to a family member, thus the exemption does not apply.

[Euro-commuter]

The same link also says this "See EIM21630 regarding the calculation of the amount of the benefit when an asset (e.g. a mobile phone) is made available to an employee for private use. ".

It says

If only one mobile phone is provided for both business and private use it will be exempt under section 319. If two mobile phones are provided for business and private use, one will be exempt and the other will represent a benefit. It is up to the employee and employer to decide which one will be exempt and which one will be chargeable as a benefit.

See EIM21630 regarding the calculation of the amount of the benefit when an asset (e.g. a mobile phone) is made available to an employee for private use.

So this page (EIM21779) says that one phone is exempt from a tax charge as a benefit; and EIM21630 tells you how to calculate the charge (a detail that you will not need to know in this case because of the exemption, but might need to know in other cases, e.g. if there were 2 phones for 1 person).

[Euro-commuter]

Hi All,

I'm looking at moving my mobile phone account from personal to business. Have read all threads on this. Only thing that seems to be uncertain is if Co Sec (my wife) who does accounting for company and is paid salary (around £5K) is allowed to have mobile phone via company. Some people seem to think you need to justify her need for one (an accountants post). Others say each employee can have one phone tax-free for personal use with no BIK and no justification required. Clarification from anyone in the know much appreciated.

Cheers, Lewis

The company can provide a company mobile phone to an employee , and they can use it freely to make personal calls.

But if the company pays for a mobile phone that is in the name of the individual, that is a benefit.

Can you identify an accountant's post that said otherwise?

HMRC say

http://www.hmrc.gov.uk/manuals/eimanual/EIM21779.htm

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.

(EIM21778 says only 1 phone per person, family and household not included: i.e. your wife can have 1 as employee, not just for being family).

http://www.hmrc.gov.uk/manuals/eimanual/EIM21779.htm

[TheRightStuff]

is it worth all the hassle for a few quid more. Spend more time working out how to increase your rate then trying to squeeze out a few pence here and there.

[opc]

Sounds logical but I have read some things that led me to believe you maybe don't need to justify business use - it seems you can provide a personal mobile phone for private use, see HMRC site here http://www.hmrc.gov.uk/manuals/eimanual/EIM21779.htm. So is it correct that each employee can get a mobile for personal use irrespective of business usage?

The same link also says this "See EIM21630 regarding the calculation of the amount of the benefit when an asset (e.g. a mobile phone) is made available to an employee for private use. ".

[Lewis]

If a mobile phone is required solely for business used by your secretary in the course of her work preparing the company accounts (a couple of hours a month?), I'm sure you would be able to justify this to the taxman.

If on the other hand it's a thinly disguised method of exploiting the Limited Company setup which the taxman can easily determine that your wife will use principally for personal calls...you may have issues.

The choice as to whether this risk is worth it for the cost of a phone isyours......

Sounds logical but I have read some things that led me to believe you maybe don't need to justify business use - it seems you can provide a personal mobile phone for private use, see HMRC site here http://www.hmrc.gov.uk/manuals/eimanual/EIM21779.htm. So is it correct that each employee can get a mobile for personal use irrespective of business usage?