You do not say whether the business in question is a limited company or a sole trader or partnership. It makes a difference.
If the business is not a limited company only the business proportion can be claimed, so you will have to keep a record of business calls to justify a claim if the Revenue challenges your figures.
A typical solution for the sole trader wanting to claim mobile phone expenses is to take three to four months’ worth of bills, analyse the calls, and then work out the ratio of personal versus business related. You can then apply this ratio as a percentage of your phone bills for the rest of the year. You may find it useful to review the ratio on an annual basis.
If you are VAT registered, you need to include the VAT only on the business portion of your calls.
For Limited companies, everything depends on the type of mobile phone contract
If the mobile phone (or sim card) is registered in a company name, all the costs can be claimed. The main proviso is that ‘personal use’ must be ‘reasonable and not excessive’. The hardware (the phone itself) counts as a company asset. VAT can be claimed on all costs.
If the phone contract is personal (i.e. not registered to the company) then there are two main ways to treat the expense:
- If the company pays for the phone and bills, then it is counted as a ‘benefit in kind’ and the costs have to be reported on what is called the P11D form and there are NICs to pay.
- If you pay and the company reimburses you, deductions have to made on PAYE and Class 1 NICs on the value of the monthly contract plus any personal calls that may add costs over the normal monthly tariff, e.g. if you use data whilst abroad on a personal holiday.
For both of these scenarios VAT can be claimed only on business costs.
As you can see, for Limited companies with several employees using mobile phones as part of their work, it starts to get complicated and so ideally you need an accountant to work out the expenses for you.
Please go here to get HMRC’s take on expenses for employers who provide mobile phones to their employees.
Compare expense management software
If you want to simplify your company expense process, there’s a number of software tools that could help make life easier for you and your employees.
Compare providers now to find the perfect option for your business.
Business Size
Moss
Submit expense claims, from mileages and per-diems to out-of-pocket expenses, in a few taps via our mobile or web app.
Tedious manual entries become a thing of the past, thanks to OCR technology which captures receipt details.
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Equals Money PLC
Equals Money’s mission is to make money movement simple. Stay on top of team spending with physical and virtual cards* and our easy-to-use online platform.
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Pricing
PSSG
Take control of your organisation’s finances with Capture Expense, the ultimate expense management software.
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Pricing
PLEO
Pleo is the smarter way to manage business spending.
Imagine: no more expense reports, no more out-of-pocket purchases, no more end-of-month panic.
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Payhawk
Payhawk is reinventing business spend with one global solution combining expense management, corporate cards, Accounts Payable and seamless ERP connections. Join finance teams in 32 countries using the spend management solution.
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Tide
Save time on your expense admin. Manage your company expenses all in one place. Empower your team to scan and upload their own receipts. Track your business spend all in the Tide app.
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Precoro
Precoro helps you transform the time-consuming expense tracking and reimbursement process. Create expenses and requests on the go. Approve documents 2,5x faster, and reduce manual data entry with OCR. Book a demo today.
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Pricing
Klippa
Automate your expense claim processing, set up secure approval workflows, and save time with Klippa. Available via mobile and web app. Including the leading OCR technology in Europe. Schedule a free demo today!
- Intelligent OCR
- Line Item Recognition
- Fraud detection
Airwallex
End-to-end expense management system for every business. Reconcile your corporate card expenses and reimbursements in one place, gain real-time visibility and control over employee spending, globally.
- expenses on the go
- real-time visibility
- simple submissions
Wallester
Wallester is a fintech company that offers the solution to issue corporate VISA cards for various needs and an in-house built platform for effectively managing corporate expenses absolutely for Free.
- 300 free virtual cards
- Unlimited cards
- Meets company's needs
Soldo
Soldo is the proactive spend management solution that frees progressive businesses to accomplish more. Over 25,000 organisations across 31 countries use Soldo to end slow
- budget allocation
- spend visibility
- Accounting software
Breathe HR
Expense management software perfect for UK Small businesses
Submit, approve, and track expenses with ease, this module within Breathe's core HR software offering allows SMEs to keep expenses & employee data all under one roof.
- Flexible, No Contract
- Cost-effective
- Per Business Pricing
Revolut
Simplify Expenses & Boost Productivity! Automate expense tracking, empower your team with tailored debit cards, and stay in control with real-time notifications. Spend less time on admin, more on growth. Get started today!
- AutoExpense Tracking
- Team Card Control
- Effortless Bookkeeping
