Reply to: Can anyone confirm something for me regarding getting an iPhone via my Ltd co?

[MPwannadecentincome]

good info in this thread

Thanks guys - many good tips in just a few postings in one thread, this helps me plan for setting up my ltd co!

[Jay Cartay]

What, so you're expecting to get a totally free smartphone with hmrc re imbursing you the full costs!?

Nope. I just wanted to make sure I was armed with all the facts. I currently have a Galaxy Note 2 as my personal phone and am due an upgrade in June.

I've just decided to keep a separate business phone. That way I know that anonymous and private calls are legit before wasting my time answering them.

[ThomserveBAS]

It's easy for people to think that way.

If you work for a permie employer and they give you a phone then it's great because it costs you nothing for these business expenses. What people overlook is that if they are the owner of the company then the business expense ultimately comes out of their pocket...

Not that I'm disagreeing with you - but on other matters relating to business and personal money (i.e. matters around taxation etc.) then the forum message is that money in the business bank account belongs to the business and everything else is yours - this is the same view I take with expenses.

Ultimately, they come out of money I've earnt but as the money is in the business account, I don't feel too strongly about claiming legitimate business expenses. I don't view them as "free" but as "attracting a 20% discount" and I love a bargain

[Wanderer]

What, so you're expecting to get a totally free smartphone with hmrc re imbursing you the full costs!?

It's easy for people to think that way.

If you work for a permie employer and they give you a phone then it's great because it costs you nothing for these business expenses. What people overlook is that if they are the owner of the company then the business expense ultimately comes out of their pocket...

[mudskipper]

Worth noting, if you're thinking of registering for VAT FRS, buy your phone (and any other expensive items) first as when you do register you can reclaim the actual VAT paid on any expenses from the previous 6 months.

[BolshieBastard]

Cheers folks. So I'm right then that the company will pay out the line rental and cannot claim that back aren't I? So it still effectively comes out of my pocket.

What, so you're expecting to get a totally free smartphone with hmrc re imbursing you the full costs!?

[administrator]

We posted an article on this not long ago:
Contractors' Questions: Can I claim an iPhone as a company expense? :: Contractor UK

[ThomserveBAS]

Another T-Mobile user here, have two contracts (mine and the wifes) through T-Mobile business and their contract rates are very good - the business pays £23/month for the two contracts, both SIM only and both with plenty of minutes, texts and data.

I have contractor colleagues who have purchased SIM only contracts and expensed the cost of the handset rather than paying inflated business prices for the handset. I have no idea if this is all "OK" with HMRC but might be worth checking out with your accountant...

[northernladuk]

Just remember the rule of thumb that legitimate, allowable expenses your company pays for aren't "free", it's just that you get a 20% discount on them.

This is a very key point that so many people forget. The other is that it must be wholly and exclusively for the business except where HMRC make exception.

Have a look at the thread below as well...

http://forums.contractoruk.com/accou...-business.html

[Wanderer]

smartphones, (iPhone) are treated as computers by HMRC, but provided no significant personal use takes place it is still tax exempt.

The information you have is out of date. It used to be correct but about a year ago HMRC changed it's stance accepted that smartphones were allowed. Your company must buy the phone and you can use it for both business and personal use. You can also have your company pay the bill with no BIK but the contract must be in the company name and paid out of the company account. See HMRC's guidance.



Some operators want to charge more for so called "business tariffs" which makes it a waste of time to put the bill through the company. I use T-Mobile because they charge the same for business or personal.

If you want to keep the contract in your own name then you can buy a phone outright on the company credit card and then put your personal sim card in it. Shop around for a sim-only tariff because they are much cheaper as you aren't paying to subsidise the cost of the phone.

You can offset the cost of the phone and rental (if it's in the company name) against your corporation tax. So a £500 phone brought by your company would be a net cost to you of £400 and a £20/month tariff would be a net cost you of £16. (The net cost is lower if you are a higher rate taxpayer)

What I'm confused about, and this may sound stupid, is what happens re: paying the contract? I take it the ltd co. will still have to pay the contract cost out and this cannot be claimed back from HMRC, as they would effectively be paying for your business's phone then? Am I right in thinking that the only benefit here is that I'd be paying for my contract minus VAT because it's coming out of the business account?

The benefit is that if you spend (say) £500 on a phone and £250 on line rental over a year then you offset that £750 against your company profit so your company doesn't have to pay corporation tax on that money. So the cost to your company of having a phone for the year was £750 but the net cost to you personally is £750 - 20% CT avoided = £600.

If you are VAT registered and NOT on the VAT FRS then you can claim the VAT back too. However, unless your expenses are more than about 13% of your company income, your net position is better off if you are on the VAT FRS.

If you are not VAT registered then you should ask your accountant about registering and joining the FRS because it's money for nothing.

Again, I know it sounds stupid/fairly obvious, but I just wanted to be 100% sure I have got this right in my mind.

No troubles, it's all a bit odd to start with...


Just remember the rule of thumb that legitimate, allowable expenses your company pays for aren't "free", it's just that you get a 20% discount on them.

[Zippy]

Cheers folks. So I'm right then that the company will pay out the line rental and cannot claim that back aren't I? So it still effectively comes out of my pocket.

Your co can offset the cost against corporation tax. I believe that you can also make personal calls on your business phone without incurring any personal tax liabilities.
No doubt our accountancy bretheren will be along to comment/correct as necessary.

[Jay Cartay]

Cheers folks. So I'm right then that the company will pay out the line rental and cannot claim that back aren't I? So it still effectively comes out of my pocket.

[stek]

Can anyone confirm something for me regarding getting an iPhone via my Ltd co?

I am planning on replacing my aging handset with a new one, but buying sim-free - very happy with the sim-only tariff I am currently using et al.
My understanding is that MvCo can buy the handset, and hence there is a VAT advantage, but I must return and proceeds on sale of the handset to the business.
Seems all good to me

Only if you are VAT registered and not on FRS

[kevpuk]

I am planning on replacing my aging handset with a new one, but buying sim-free - very happy with the sim-only tariff I am currently using et al.
My understanding is that MvCo can buy the handset, and hence there is a VAT advantage, but I must return and proceeds on sale of the handset to the business.
Seems all good to me

[northernladuk]

You pay CT on profits. Your phone bill is taken off before tax so you are effectively saving 20% on the cost of the contract to you. Nothing to do with VAT

The contract for the mobile must be in the company name and paid from the company account.

You will probably find that business rates are around 20% higher than personal ones as it happens though.

Make sure you have a good accountant. Most of the contractor ones have guides on what you can and can't claim and how. SJD and NW certainly do.

Don't forget to check out the guides to expenses in the newbie guides to the right and also have a look on how to search the forums in the thread below...

http://forums.contractoruk.com/welco...uk-forums.html