Reimbursing employee phone calls

Over the Christmas period, some of my employees were required to be on call 24 hrs per day, and consequently use their personal mobile phones to make business calls. Some have submitted expense claims for the calls and others have not. Should I operate the reimbursement for these calls in certain way? 

1st February 2009

You have a number of options where employees use their personal phones to make business calls, each with different Tax and National Insurance implications:

If you reimburse the cost of the mobile telephone, service charges or the cost of private calls, the amounts must be assessed through the payroll for Class 1 NIC and tax.  This treatment also applies where you provide the employee with a voucher for use in relation to the mobile telephone or private calls made on it.

If you just reimburse the costs incurred by an employee in making business calls only on his or her own mobile telephone, you can ask for a dispensation from the HMRC. If you do not have a dispensation you must return the full cost you have incurred on reimbursing the calls on form P11D at section N. No Class 1 or Class 1A NIC is payable. The employee can then apply to the HMRC to advise that the payment is for expenditure incurred in the course of their employment and claim a refund for tax paid on this.

An alternative option is to provide these employees with a mobile telephone for business and enter into a service agreement with the telephone company. Then there would be no liability for NIC or tax. This applies to the provision of the telephone, the service and all private and business calls.

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.

Call us today to make an appointment at your local office

0800 0523 555

Or submit an enquiry