Expenses and benefits: mobile phones

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1. Overview

As an employer providing mobile phones to your employees, you have certain tax, National Insurance and reporting obligations.

This includes:

  • costs for phones you provide to employees
  • reimbursing your employee’s own phone costs

2. What's exempt

You do not have to report anything to HM Revenue and Customs (HMRC) or deduct and pay tax and National Insurance if both the following apply:

  • you provide your employee with only one mobile phone or SIM card
  • the phone contract is between you and the supplier

Salary sacrifice arrangement

You do have to report employees’ mobile phone costs if they are part of a salary sacrifice arrangement.

3. What to report and pay

If telephone expenses are not exempt, you must report them to HM Revenue and Customs (HMRC) and may have to deduct and pay tax and National Insurance on them.

Some mobile phone expenses are covered by exemptions (which have replaced dispensations). This means you will not have to include them in your end-of-year reports.

If you provide more than one phone to an employee

One of the phones is exempt from paying and reporting, but any other phones count as assets.

If your employee arranges the phone but you pay the supplier

You must pay tax and Class 1 National Insurance through payroll.

If your employee uses their own phone and you reimburse them

You do not need to report this on form P11D. You may still have to deduct and pay Class 1 National Insurance and PAYE tax through payroll.

If they have a monthly phone tariff

You must deduct and pay National Insurance and tax if you reimburse the cost of one or both of:

  • the monthly phone tariff
  • private calls over the limit of the monthly tariff

For any business calls over the limit of the monthly tariff, you do not have to deduct and pay National Insurance or tax.

If they have a ‘pay as you go’ mobile

If you reimburse the employee for business calls, you do not have to deduct and pay any National Insurance or tax.

4. Work out the value

The value to use for reporting or paying tax and National Insurance depends on who arranges and pays for the mobile phone, and whether you cover the cost of personal or business calls.

Your employee arranges the phone but you pay the supplier or reimburse them

The amount to put through payroll is the amount of monthly tariff you reimburse, plus the cost of any private calls above the tariff if you reimburse these as well.

You do not need to report the cost of any business calls you reimburse that are on top of the monthly tariff.

Your employee has a ‘pay as you go’ mobile and you pay for business calls

The value to use is the amount you reimburse or give to the employee as a ‘top up’.

Salary sacrifice arrangements

If the cost of the mobile phones is less than the amount of salary given up, report the salary amount instead.

These rules do not apply to arrangements made before 6 April 2017 - check when the rules will change.

5. Technical guidance

You can read more detailed information in particular benefits: mobile telephones: exemption for 2006/07 onwards.