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:

  • Telephones
  • Introduction
  • Employer pays for a landline
  • Employee pays for a landline
  • Other telephone related costs
  • Calls in the performance of duties ― expenses treatment


This guidance note deals with employee home telephony costs and not mobile phones. For details on mobile phones, see the Mobile telephones guidance note.

The provision of home telephony benefits is not covered by specific legislation. Instead, consider the nature of the costs, who is paying for the costs and the reason for the expenditure. The tax, National Insurance (NI) liabilities and reporting requirements will follow.

For the purposes of this section a telephone covers the provision of a landline telephone or a wireless extension of a landline network, such as a cordless telephone.

Employer pays for a landline

Where an employer pays a phone company directly there will be one of two different types of contractual arrangement in place. If the employer has a contract with the provider then there is a benefit to the employee and Class 1A NIC is appropriate. If the contract is between the employee and the provider then the employer is meeting a liability of the employee and Class 1 NIC is the appropriate contribution. Both are considered below.

Contract between employer and provider

If an employer pays for an employee’s home landline and all associated calls then there is a taxable benefit. That benefit may be included in the employer’s payroll. There are notification requirements for the employer to HMRC in advance of the tax year but as the contract is likely to be for a regular amount it may be suitable benefit for an employer to consider payrolling.

If an employer does decide to the include the amount in payroll, and has registered with HMRC to do so, then the cash equivalent amount of the benefit should be apportioned across the year and added as an additional item of taxable pay in the Full Payment Submission (FPS) for each regular

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