What can I claim - Mobile Phones

Most businesses now have mobile phones used by their owners or employees. But just what can you actually claim for them?

The answer to this question is slightly different depending on whether your business operates as a sole trader, or as a limited company. We will address both.

Sole Trader

As a sole trader to claim back money spent you are required to show that it is a true business expense. That is that the expense is "wholly and exclusively" for the business. This means that you must carefully apportion personal calls and remove them from the bill, claiming only business calls and a percentage of the line rental.

For example, if 25% of your calls are for personal use and your bill is £100 you can only claim £75 as a business expense.

Limited Company

The rules here are slightly different because the directors are also employees. If the mobile phone belongs to the company and is provided to you as an employee then any benefit is excluded from Income Tax and National Insurance.

If the phone is owned by you personally, thing get a little more complicated. Only the business usage is reclaimable in this instance. The problems arise when you use free calls included in the tariff for business as HMRC's view is that no additional cost is occurred. Therefore you can only claim additional calls over and above those included.

And...

For both examples if your business is VAT registered you will need to remember to apportion the VAT element too between your personal and business usage as this is something HMRC have been cracking down on recently.

As always, this brief article offers general guidance. You should not rely on this as a definitive guide and should always seek professional advice if you are in any doubt of your particular circumstances.

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