There may be other circumstances in which you make a payment to an employee to meet the cost of telephone calls. Examples can include:

• business calls made from a payphone
• business or private calls made from a hotel while on a business trip
• business calls made from home where another member of the household is the subscriber.

In these and similar circumstances the principles to follow are:

• for payments that do not exceed the actual cost incurred by the employee for business calls:
  • for tax you can ask for a dispensation to remove any reporting obligation for such payments. Without a dispensation the payments are taxable and should be reported on form P11D, but the employee may be entitled to a deduction
  • there is no liability to pay NICs
• for other payments, such as payments greater than the actual cost, payments for private calls or payments of rental charges, the payments:
  • are taxable and should be subject to PAYE or reported on form P11D, but the employee may be entitled to a deduction for the actual cost of business calls
  • are generally liable for Class 1 NICs, but there is no liability in respect of specific payments to meet the actual cost of business calls.

There is an exemption from tax and no liability for NICs for payments made to cover private telephone calls made by an employee while on a business trip that requires an overnight stay. The exemption only applies where all incidental expenses met or reimbursed by the employer do not exceed £5 per night (or £10 outside the UK). For more information about this look at EIM02710.

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