Two points for you to note are:
- Any business expenses that you incur must be wholly and exclusively for your business, and;
- Where there is a duality of purpose, i.e., you will incur the cost on a personal level regardless of any business use, and you will pay extra tax if you claim these costs from your business.
History gone by
Around ten years ago, employers who chose to provide their employees with a mobile phone also provided them with a Benefit in Kind (BIK). The BIK was £200, and this was taxable on the employee through their PAYE tax code.
Today, if you use your mobile phone for business reasons and you claim this. There is no BIK. Please note you need to try and make sure that the account and bills are in your business name. Furthermore, you should also make sure that any token personal use is ‘reasonable.’ If you follow this advice, your mobile phone costs are an allowable business expense.
What you can claim for?
Dedicated business landline
Can you claim for a dedicated landline for business? Yes, on the basis that you will use the line for business calls only. The account and bills also need to be in the business name.
What’s more, when you have a dedicated business line or, if you work from home, you may have your own home office. Two things to think about are how to create your home office and what can you claim for the use of this.
Business only calls
Business only calls on your personal mobile or landline phone bill are a genuine business expense. You can also reclaim the VAT element of the business calls. However, you cannot claim any part of the line rental. Indeed, this is because you will incur the cost if you use it for business or not.
Furthermore, it can now be difficult to split out the cost of business calls due to the way that phone companies now package phone costs with free minutes, etc.
Therefore, if you are not able to separate the business calls from the personal phone bills, you are unable to claim due to the duality of purpose rules. To explain further, this is because the business calls incur no extra cost on top of the tariff that you already pay for your personal calls.
You can claim for broadband if you have a dedicated broadband connection, and the line is usable only for business usage. The account and bills should be in the company’s name. HMRC accept that there may be a minor personal usage here.
If your broadband is in your personal name, you cannot claim this. That is unless you can split out the business element.
If you have no broadband contract at home and you need internet access to carry out your trade, then you can claim any costs here for your business.
Please refer to the HMRC manuals below for technical advice. These relate to the tax treatment of telephone-type expenses.
- EIM32945 –Mobile phone charges.
- EIM32940 –Telephone charges. The manual explains why you are unable to claim for line rental on the phone used for both business and personal use.
- EIM01475 –Broadband
Please note, I would advise you to claim your business phone and broadband costs. Most contractors claim for their mobile phone costs. Many also claim for the business element of their broadband charges.
Link to Contractor Advice UK group on LinkedIn https://www.linkedin.com/groups/4660081/