Landline telephone at employee’s home

By Tolley in association with Philip Rutherford
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The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Landline telephone at employee’s home
  • Introduction
  • Employee pays for a landline
  • Employer pays for a landline
  • Other telephone-related costs
  • Calls in the performance of duties ― expenses treatment

Introduction

Employers may provide employees with landline telephones, often in order to allow them to work from home. The provision of home telephone benefits is not covered by specific legislation. Instead, the nature of the costs, who is paying them, and the reason for the expenditure in order to determine the tax and National Insurance liabilities and reporting requirements should be considered.

The key considerations are who pays for the landline and who has the contract with the provider. Additionally, consideration should be given to whether tax relief is available if there are business elements of the benefit.

Employee pays for a landline

The most common arrangement is where an employee contracts with a telephone provider and pays the costs directly.

Where an employer reimburses an employee for the costs of line rental and private calls, these amounts should be treated as if they were salary. Therefore the full amount reimbursed should be included in payroll and subjected to both tax via PAYE and Class 1 NIC.

If the amounts reimbursed include expenses in relation to business calls then these amounts are allowable for a tax deduction (see the Calls in the performance of duties ― expenses treatment section below) and do not need to be included in the amount in payroll. As long as the amount reimbursed is no more than the amount that the employee could otherwise claim as a deduction for business expenses, it comes within the exemption at ITEPA 2003, s 289A and needs not be included either in payroll or in form P11D.

Employer pays for a landline

Where an employer pays a phone company directly there are two possible types of contractual arrangement. If the employer has a contract with the provider then there is a benefit to the employee and Clas

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