If you are working in an industry where you or your employees are using a mobile phone on a regular basis, then there is no reason why you shouldn’t be classing your mobile as a capital expenditure and we show you how to retain value out of the phone over the its lifetime.
First some history
A tax of £200 flat rate charge was introduced in 1991 as a tax charge on mobile phones provided by employers, this was to deter companies from providing them on the company account. Since then, the importance of a mobile phone has grown and has been recognised as a leading driver of business for many companies and was since scrapped in 1999 to allow mobile phones to become a tax free benefit for employees.
Historically this did not cover smartphones as the exemption did not cover PDA’s and for a while there was a grey area where smartphones were not considered to be part of the exemption, this has since been adjusted so that smartphones now qualify for this exemption.
For a mobile phone to be considered tax free, the HMRC has put several conditions in place;
- The employer must be the name on the contract, not the employee
- The employer must retain ownership of the mobile phone
- The employee can only benefit from this tax exemption on a single mobile phone
Failure to meet these conditions will mean the mobile will not be exempt and the employer will be liable for tax liabilities.
Ownership and recouping value
There can be many reasons why a phone handset is returned to the employer, the employment is terminated, or the phone reaches the end of it’s usable lifecycle or worst case scenario, it’s broken, there are ways to recoup at least some of the value of the phone depending on the condition of the phone.
There are many companies that will take in business mobile phones and each will offer different prices, there are mobile phone recycling comparison sites available such as Compare and Recycle and Mobile Valuer.
These sites will generally do the hard work for you and recoup some of the investment made into the old mobile phones, handy for businesses that have a high turnover of mobile phones that tend to just sit in an office cupboard unused.
Of course, for many small or new businesses, it’s not always viable to sign up for a contract because the new company might not have the credit rating needed to be able to sign up for a contract phone, which leads directors to take contracts out in their own name.
Mobile phone networks may also assign a premium to a business contract as they expect more calls to be made on business contracts. But there are various business mobile phone comparison sites around that allow you to shop for the best deal around.