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