If you’re a busy businessperson, chances are you’re more or less permanently attached to your smartphone. Whether it’s melded to your ear, constantly clutched in your hand or busy helping you to meet your associates via a Facetime function – there’s no escaping how essential your smartphone is to your business life. But how essential does HMRC consider your phone to be? If you’re just starting out or are hoping to reduce your tax bill, it might interest you to know that your mobile is a great big allowable expense. Not sure how it all works? We’ve put together a quick and simple guide.
From using smart, cost-savvy mobile data providers like MobiData, to making smart choices when it comes to your contract, there are all sorts of ways to lower the cost of your smartphone. Today, however, it’s time to get non taxable to take your technological outgoings right down…
Buying a Handset
Your swish new handset is an allowable expense if you meet the following conditions:
- The handset has been paid for from a business bank account
- The handset is owned by the limited company, not the company director
- This information is noted on invoices from the seller
If you are making business calls and using data, texts and minutes for business purposes, your phone bill qualifies as an allowable expense. This can make things confusing if you are using the phone for both personal and business purposes. In this case, ‘reasonable personal use’ and ‘token use’ are acceptable. Essentially, as long as you are not taking the proverbial absolute biscuit, you can claim back your tax for your monthly contract.
Using a Personal Mobile
If it makes life easier, you can instead claim for business calls made on your personal mobile phone. Of course you will not be able to claim the handset as a business expense, however, you can record and legitimately claim back the cost of any business calls made via your personal phone.
Claiming Back VAT
Whether or not you can claim back VAT on your mobile phone bill depends on whether or not you are using it for business or personal purposes. Realistically, most people use one mobile for both, which means you will need to work out what proportion of your usage is for business and what proportion is for personal affairs. For example, if it works out that you use your phone half of the time for business, you’ll be able to claim back 50% of the VAT.
Please note, if you’re using the flat rate VAT scheme, you will not be able to claim back VAT on your mobile.
If used for business purposes, these are entirely allowable expenses. Just make sure you retain your receipt.
HMRC’s rules have changed regarding smartphones. Before the smartphone became such a common piece of equipment it was considered as superfluous to requirements and more than a simple mobile (because it was able to email etc.). HMRC therefore did not treat is as an allowable mobile phone expense.
This changed in February 2012 so you can now claim back your tax on your smartphone just as you can for a non-smart mobile phone – just make sure that you follow all of the rules listed above (i.e. the phone must be bought in the company name and with company funds).