As a UK limited company contractor or small business, what can you claim for phone and broadband costs? What’s more, when you’re contracting and run your own company, you’ll likely incur business phone and broadband. Therefore, is there a tax-efficient way to claim phone and broadband costs as business expenses? As an owner of your own company, besides your business broadband and telephone costs, can you also claim our business mobile phone expenses? When working for yourself, you may ask what can I claim as a contractor and the questions on phone costs will arise when it comes to considering claiming phone and internet on tax. In this guide, we’ll look at when you can go about claiming broadband expenses working from home and how to work this out. We’ll also research in detail what to think about when you claim phone expenses and expense business broadband costs.
What are the main considerations when you claim your phone costs and broadband expenses, while UK contracting or trading? Basically, there are two key points for you to note:
- Any expenses for mobile phone, business broadband and phone line which you incur must be wholly and exclusively for your business.
- Is there a duality of purpose? By this we mean is the cost that you plan to claim as a business expense, a cost you’ll incur on a personal level regardless of any business use? If the answer is yes, you’ll pay extra tax if you claim for such costs through your business.
Indeed, these are key considerations and you should bear these in mind when you claim for phone and broadband costs through your business.
Let’s research, as a contractor how to claim phone expenses and how to claim broadband costs through your company. Let’s also look at what considerations there’ll be when making claims for business telephone and broadband charges. What’s more, we’ll also consider can you claim internet on tax return if you’re self-employed. To summarise, any working from home broadband expenses and contractor phone charges may add up to a significant amount. Therefore, if you incur these costs, you should make a contractor claim. In this guide, we’ll consider all the angles in respect of claiming phone on tax and claiming internet on tax.
Recent history and how to claim mobile phone as business expense
If you work in IT, you may ask what can I claim as IT contractor tax deductions? What’s more, as part of a claim for phone and broadband costs, you may ask can I claim my mobile phone as a business expense? In fact, can I buy a mobile phone through my business too? Twenty or so years ago, some employers would choose to provide their employees with a mobile phone for work. Those that did also provided their employees with a Benefit in Kind (BIK). At that time, the BIK was £200. This was taxable on the employee through their PAYE tax code that was applied to their salary.
What happens today
Today, when it comes to claiming phone bill on tax, an employer can provide each staff member with one mobile phone for business use with no associated BIK. If you run your own company, it can do this for you too. Therefore, when it comes to a mobile phone, contractors can also do this through their company. As a result, you can claim the charges for your business mobile phone expenses or SIM card tax-free, and there is no BIK.
As part of your small business mobile phone tax deduction, it’s advisable to get the bills in your company name. Therefore, you should ensure that your mobile phone contract is in the name of your contractor limited company. It’s also key to take note that although you may use your mobile phone for work and personal calls, you should ensure that any token personal use’ is ‘reasonable.’ Following this advice, you can claim phone expenses for your mobile usage and these are tax-deductible expenses.
Some common questions around phone and broadband charges will often arise from UK contractors. Therefore, for those who are looking to make a small business internet and phone claim such questions will include:
- Can I buy a phone through my limited company?
- Can you claim broadband as a business expense?
- How much internet can I claim on tax?
- Can I deduct internet as business expense?
- Can I deduct my home internet as a business expense?
- How much of internet bill is tax-deductible?
- How much internet can you claim on tax?
- What percentage of internet bill is tax-deductible?
- Can I claim my home phone charges as a company expense?
- How much of my phone bill can I claim?
- What can I claim for my mobile phone costs?
- Is wi-fi a business expense?
- Is there VAT on broadband?
In this guide, we’ll consider all of the above. What’s more, we’ll take an overall look at what internet and phone you can claim as part of your expenses.
Claim for phone and broadband costs -what can you claim?
Let’s now research what you can claim for your small business phone and broadband costs.
Mobile phone expenses
When you’re a contractor or small company owner and use your mobile for work reasons, you can claim your mobile phone costs. However, you should ensure the personal element is only minor. If you’re starting your own business for the first time or have even been trading for a while and your mobile phone contract is up for renewal, you may decide to get your new mobile phone contract in the name of your limited company.
As part of deciding on a mobile phone deal for your company, you should aim to choose the best package. You can do this when you look into mobile phone contracts for small business. Basically, when you search, you should consider the terms of the monthly tariff. As part of this, you can ensure it fits with your predicted future needs for your business calls. Also, as most mobile phone contracts are for 24 months, you’ll need to consider this too when you take out a new mobile phone contract.
Business landline and broadband
Let’s consider a claim for phone and broadband costs if you have a dedicated business telephone line and broadband. Basically, can you claim the business line rental and broadband costs through your company? The answer is you can claim phone expenses and your contractor business broadband cost. However, claiming for your business landline cost is on the basis that you’ll use your contractor business phone line for business calls only. In addition, the contract and bills for your dedicated business broadband and landline must be in the company name. As a result, you can claim the business phone costs and save tax on the landline for business use.
What’s more, if you work from home and have a dedicated phone line for work purposes, you may have your own home office. Two further things you can think about here in respect of tax relief when you work from home are:
A further thought is when you have a dedicated phone number for your company, it’ll look more professional. This is in terms of how it’ll look to your clients and contacts. Indeed, when shown on stationery such as business cards, letters, invoices, etc., it’ll remind them of your business.
Work-related only calls on personal phones
When you claim phone and broadband costs, please bear in mind that business call charges on your personal mobile or landline phone bill are a genuine business claim. If they are, your company can claim phone expenses for such work-related calls. What’s more, it can reclaim the VAT on business phone charges. However, you can’t claim for any part of the line rental. Basically, this is because you’ll incur the cost of your personal mobile or landline phone whether you use it for work reasons or not.
Furthermore, when you claim phone expenses, splitting out the cost of work-related calls can be difficult. This is due to the way that phone companies now package phone costs with free minutes, etc. Therefore, if you’re not able to separate work calls from personal phone bills, you’re unable to claim them. This is due to the duality of purpose rules. To explain further, business calls incur no extra cost because of the tariff you already pay for your personal calls.
Business broadband expenses -can I claim internet as a business expense?
Claim for business broadband costs
Can I claim broadband as a business expense (UK)? When you have your own company and are looking to make a claim for phone and broadband costs, you may ask can I claim broadband as a business expense? As part of a broadband for business (UK) service, you’ll need a small business internet connection to access e-mail and work-related websites. Therefore, when you choose a company broadband service, you’ll need to look for the best deals available for your small business broadband cost. There’ll be several factors to consider if you’re going to use the internet for business use. Basically, when finding the best broadband deal, this’ll include the download speed. Therefore, it’ll be good to do your research into business broadband packages before you choose the one right for you.
Many limited company contractors and business owners may consider can I claim my internet bill as a business expense? It’s key to remember that you can claim business broadband costs if you’ve a dedicated business broadband connection. Furthermore, as part of your business broadband at home, you should only use the phone line for business purposes. When you do this, you can search the market for a good broadband for small businesses deal.
The new business phone line and broadband account should be in the company name. As part of your business broadband costs, HMRC accepts there may be a minor amount of personal usage.
Home internet business expense and percentage of phone bill tax-deductible
When you work at home, what should we think about when we consider can I claim my home internet as a business expense and when are internet expenses tax-deductible? Basically, if your home office broadband is in your personal name, you may ask how much of my internet can I deduct for business? Basically, the general rule for business broadband for home workers is you can’t claim for your home broadband cost as a contractor expense unless you can split out the business broadband costs element or approximate business element.
It’d be fair to say, if you use your home office broadband significantly for work reasons, and you estimate your contractor broadband costs to be 50% of your overall usage, then you are ok claiming internet as business expense and can put through 50% of the overall broadband cost as your internet tax deduction. In turn, the broadband for home office will save company tax. On the other hand, if you’re self-employed, you could make the relevant claim for the cost of broadband charges as a home internet tax deduction via your personal tax return.
If you’ve no actual broadband contract at home and need internet access (e.g., on your phone) to carry out your trade, then you can claim any internet for business related costs for your company. As a result, you’ll need to work out your home business internet deduction based on the actual business cost.
Choose a provider for business broadband and phone (UK)
When you do your research, there’s plenty of deals for a business phone line with broadband. Most contracts for phone and broadband will last for two years or even three years. However, some deals for phone and broadband for small business (UK) are better than others. When you compare the current deals for business phone line and broadband, you’ll need to look at the cost, speed, download limits, and other factors to find the best small business broadband provider.
With regard to providers for business phone & broadband, there’s plenty of choice. Some of the leading providers for business landline phone contracts are BT, Virgin Media, Sky, PlusNet, TalkTalk, and XLN. As a result, you can do a business phone line and broadband comparison to find the best deal for your company.
Claim for phone and broadband costs -other considerations
When you look at small business broadband and phone deals, there’s more to consider as we show below.
Full fibre broadband
This type of broadband is fairly new on the scene and most of the top UK suppliers will have this available. It’s a type of high-speed broadband and uses fibre optic cables for transferring data. This is faster than a normal broadband connection which uses standard copper cables.
Wi-fi for small business (UK)
When you purchase a business phone and broadband for business package, you can choose to add wi-fi for an additional cost per month. What’s more, this’ll give you an online network. When you have this for your working from home broadband, you can connect your business devices to the internet.
Static IP address
An IP address is a unique digital reference for a specific point on the internet. Therefore, what’s the benefit if you get a static IP address as part of your phone line and broadband for business? Basically, this is a fixed Internet address rather than one that is dynamically assigned to you each time you connect. When it’s static, it always stays the same, making it possible for users and other businesses to find you on the internet. You’d need a static IP address if you were hosting your website or running an e-commerce business. Most UK companies charge a small extra fee for a static IP address.
When you have broadband for your business at home, you may wish to check the download and upload speeds. You can do tests online. Generally, a good download speed is at least 100 Mbps, while a good upload speed is at least 10 Mbps. You may need further research in this area if you have customers connected to your services and are streaming data to them. Asa result, you can look into some high-speed internet for home office.
Claiming mobile phone expenses (self-employed UK)
If you’re a sole trader, the rules above on business-only calls apply. Therefore, you’ll need to try and identify any work-related calls on your mobile and home phones. Once you’ve done so, you can go ahead claiming mobile phone on tax on the business element. When you do this, you will include the business claim as an expense on your Self Assessment tax return. HMRC have further guidance on expenses when you’re self-employed which is worth a read,
Claim for phone and broadband costs for business -HMRC guidance
Please refer to the HMRC manuals below for HMRC’s technical advice on small business telephone and broadband. These relate to the tax treatment of business phone and internet costs including telephone-type expenses.
- EIM32940 –Telephone charges. This manual explains why you cannot claim line rental on the phone used for both business and personal use.
If there’s `excessive’ personal use of your mobile phone charges, broadband charges, or lots of personal use on your business line, you should not claim these costs. If you proceed to claim, HMRC will treat these as taxable benefits:
- The company will need to pay Class 1A National Insurance; and
- The employee will also need to pay tax on these.
VAT on phone bills and internet
If your company is VAT registered, it can claim the VAT on any business-related phone and business broadband costs. However, this is on the basis that the contract(s) for the phone & broadband are in the name of your limited company.
It’s key to bear in mind that it’s best practice to claim for phone and broadband costs which you use for business. If you work from home some of the time, or much of the time, and use your home office broadband for work reasons, you can make a business claim as contractor expenses for what you think is the fair business element. We cover above all of the considerations for mobile phone, internet and phone service for small business. We also explain how you can save tax on these costs.
Most UK contractors and company owners claim their mobile phone costs as company expenses. What’s more, many will claim expenses for the business element of their broadband charges. If you’re to obtain a work landline it’s best to do a business phone and broadband comparison to find the best deal going. Therefore, please ensure that you claim phone and broadband costs if you’re using the business phone and internet service for work purposes. If you enjoyed this guide, please have a read of our article which covers tax tips for contractors.
Link to Contractor Advice UK group on