Mobile telephones

By Tolley in association with Philip Rutherford

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

  • Mobile telephones
  • Introduction
  • The exemption
  • What is a mobile phone?
  • One mobile phone
  • Employee’s mobile phone
  • Calls in the performance of duties ― employee’s own personal phone
  • Hands-free kits
  • Salary sacrifice


In recent years, the provision of mobile phones (or sim cards) to employees has become increasingly common. There is a general exemption from tax under ITEPA 2003, s 319. Despite this, in a number of circumstances, a tax liability could arise. These are considered below after details of the exemption.

The exemption

Before considering whether a tax liability arises, first establish if there is an exemption available.

The exemption in ITEPA 2003, s 319 covers the following:

  • the provision of one mobile phone to an employee. The mobile phone can cover a number of connections, eg one sim card for a car system and one for a mobile phone
  • the line rental and the cost of all private calls associated with that mobile phone

The exemption covers any amount of private use. In reality, employers will want to limit their exposure to cost, but even international calls do not attract a taxable benefit on the employee.

The exemption does not cover a device which is physically connected to land line or a wireless extension of a telephone network.

HMRC guidance is at EIM21779.

What is a mobile phone?

While it may appear obvious what is a mobile phone, the development of mobile technology has meant that HMRC has had to give guidance on what it accepts as a mobile phone.


HMRC accepts that ‘smartphones’ are mobile phones for the purposes of the exemption. Therefore, mainstream smartphones, such as an iPhone or Blackberry are mobile phones for the purposes of the exemption.

HMRC also accepts that certain types of personal digital assistant (PDA) qualify as mobile phones. If a PDA has no telephony function it cannot,

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