Many business owners unknowingly miss out on a simple and legitimate tax advantage when it comes to their mobile phone contracts.
We regularly see clients paying for mobile phones personally, when, in most cases, those costs could be structured far more tax efficiently through the business.
The Key Rule: Company vs Personal Contracts
If a mobile phone contract is taken out in the company’s name, HMRC allows:
• The full cost of the contract to be paid by the company
• No Benefit-in-Kind (BIK) charge for the employee/director (usually limited to one handset per person)
• The expense to be treated as a tax-deductible business cost
In simple terms:
The company pays, the company gets tax relief, and you pay no personal tax on the benefit.
What Happens If It’s in Your Personal Name?
If the contract is in your personal name, even if the business reimburses you:
• The reimbursement can be treated as extra income
• You may be liable for Income Tax and National Insurance
• The company may also face additional NIC costs
Result: You lose the tax efficiency, even if the phone is used for business.
The Good News: You Can Change This
If your current mobile contract is in your personal name, it’s often straightforward to:
1. Transfer or upgrade the contract into the company name, or
2. Take out a new company contract when your current agreement ends
Many providers can assist with transferring billing responsibility to a limited company.
Why This Matters
Small changes like this can add up over time:
• Reduce unnecessary personal tax
• Ensure compliance with HMRC rules
• Make your business finances more efficient
For directors and business owners, this is an easy win, yet it’s often overlooked.
A Quick Reminder
• Typically, the exemption applies to one mobile phone per employee/director
• The contract must be between the provider and the company (not reimbursed personally)
