Mobile telephones

Produced by Tolley in association with Philip Rutherford
Mobile telephones

The following Employment Tax guidance note Produced 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
  • Employer pays the provider (contract phones)
  • Values
  • Employer reimburses employee (contract phones)
  • ‘Pay as you go arrangements’
  • More...


The provision of mobile phones (or sim cards) to employees is a common benefit. 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:

  1. 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

  2. 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. See the Telephones guidance note for information on landline phones.

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 now accepts that ‘smartphones’ are mobile phones for the purposes of the exemption such that issues on the definition now rarely arise. Therefore, mainstream smartphones, such as an iPhone or Android device, 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, by definition, be considered a mobile phone. As smartphones are now so comm

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