The costs will be deductible against the company profits, but the personal tax position for both items will depend on whether the bill is issued in the name of the company or in your own name and will lead to an Income Tax and National Insurance (NIC) liability for you, based on the full costs incurred.
If the bill is in the company name, and the contract is between the company and the provider, then put the full amount of the rental and call charges on form P11D and they will be subject to Class 1A NIC- but the company pays this. You will then pay income tax on the benefit- although eventually, HMRC are likely to collect this tax via your tax code and the PAYE system. Alternatively, if you reimburse the company the cost of the private calls, no Class 1A NIC will fall due and you will eliminate the benefit.
If the landline is registered in your personal name, then it is regarded as a payment made on behalf of the employee. You should include the line rental and call charges with the employee’s gross pay. Therefore, Class 1 NIC and income tax will arise. Unless the use is exclusively business, the only way you can reduce the benefit is to identify any business calls and no claim can be made against the line rental.
If you are making numerous calls for business purposes, it is probably more tax efficient for you to receive the use of a company mobile, registered in the company name. Generally, no tax or NIC liability arises on the use of a company mobile, even where the mobile is used for private calls.
If you think you are not claiming enough business expenses such as telephone bills or you would like to review the structuring of your expenditure, please feel free to contact your local TaxAssist Accountant for some advice.
By Jo Nockels
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.