SE21781 – Benefits: hands-free mobile telephone kits
Section 155AA ICTA 1988
SE21780 explains the tax consequences when an employer provides
an employee with a mobile telephone.
In Section 155AA(2) a mobile telephone is defined as wireless
telegraphy apparatus designed or adapted for the purpose of
transmitting and receiving spoken messages, so as to provide a
telephone which –
(a) is connected to a public telecommunications system; and
(b) is not physically connected to a land-line.
We accept that a mobile telephone hands-free kit comes within the definition of apparatus for this purpose.
Hands-free kit fitted in an employee’s own car
On general principles, the provision by an employer of a
hands-free mobile telephone kit for use in an employee’s car
is chargeable as a benefit in kind. However, as long as the
employer retains ownership of the kit, there is no benefit charge
because of the exemption in section 155AA.
If, on the other hand, the employer buys the kit and
transfers ownership to the employee, section 155AA has no effect
and there is a benefit charge if the transfer occurs at other than
market value (
SE21640).
If the employee buys the kit and the employer reimburses the
employee, the reimbursement of the expense is taxable under Section
153 ICTA 1988 (
SE20601).
Hands-free kit fitted in a company car
Where an employee is provided by his employer with car, the
hands-free kit is an accessory and would normally be included in
the price of the car for tax purposes. However, Section 168A(11)
ICTA 1988 specifically excludes a mobile telephone within Section
155AA(2) from being an accessory. So there are no benefit
implications at all where a hands-free kit is fitted in a company
car.
There are also no benefit implications if an employee buys
the kit and fits it with the employer’s permission.
However, if the employee buys the kit and the employer
reimburses the employee, the reimbursement again represents taxable
expenses under Section 153.
Fitting costs
Fitting costs are included in the cost of the asset, which is the whole mobile telephone fitted into the car, not the hands-free kit in isolation.
