Mobile phones for a limited company

[Oscar Boatfield]

I have recently started a Limited company, and want to know whether it is possible to have a personal mobile phone contract used strictly for business, or if it has to be on a business contract, as I can find much more affordable personal contracts over business ones.

Any help would be greatly appreciated!

 

[StevensOnln1]

For the company to claim it as an expense the contract has to be in the company's name and paid directly by the company (i.e. it cannot be paid for by the director and reimbursed).

 

[Oscar Boatfield]

Ok thats great, thanks for your help, Just to be clear... that means that it is the case of having to get a full on business contract?

 

[StevensOnln1]

If you want to claim the cost through the company then yes. Although you should bear in mind that the increased cost can outweigh the tax saved.

 

[Oscar Boatfield]

Thanks for that, you have been very helpful! Its mostly down to not having enough minutes on my personal contract, so am in dire need, of a phone which I can use for longer periods of time.

 

[john1989]

Some providers will switch the contract over to your Ltd after you have taken the personal contract out.
o2 and Vodafone used to do it.

 

[Kenny@myaccountantfriend]

I switched my personal phone on Vodafone to my company last month with no change to the monthly fees or the tariff.

 

[My Owl 1]

Phone contracts should be the same for both personal and business,offering unlimited texts and call packages that can be increased or decreased due to the demand of the user, with data packages if required. Simples.

 

[UK Contractor Accountant]

You do not have to the contract in the company's name to claim the cost of business calls against the business - all you need to do is make an expenses claim against the company for the cost of business calls made on your private mobile phone.

 

[David Griffiths]

But there would be no claim if the calls are within the monthly "free" minutes allowance, as that cost is incurred anyway. Only calls outside that allowance can be claimed

 

[UK Contractor Accountant]

Not so sure on that - the OP said it was used 100% for business so no private use of free minutes.

 

[David Griffiths]

I'd draw a parallel with claiming on a landline which is in the name of the director but claimed to be used solely for business. The line rental wouldn't be allowable, or if paid by the companywould be subject to tax as a benefit in kind (and to full Class 1 NIC).

 

[UK Contractor Accountant]

I personally don't think it would be knocked back by an HMRC Inspector if it can be shown the OP has another personal mobile phone contract on which he makes all his personal calls.

 

[Oscar Boatfield]

this all great help thanks guys!

 

[Oscar Boatfield]

So if i were to just charge a normal phone contract through my company account, and can show that it is used strictly for business, then It would be ok if it was not in the business name?

 

[David Griffiths]

UK Contractor Accountant thinks it's OK. I don't.

We are dealing with the rules for employees claiming expenses here, not the rules for expenses for corporation tax.

 

[andygambles]

So if i were to just charge a normal phone contract through my company account, and can show that it is used strictly for business, then It would be ok if it was not in the business name?

With experience I would say no.

The contract must be with the company. If you are self employed it is different. But for limited companies the contract must be with the limited company.

I choose to have a personal contract as they are much cheaper. Rarely go over the unlimited texts, minutes and Data .

 

[john1989]

I agree with David.

Some phone companies will change the contract from your name to your company name once you have signed for a personal contract. It takes one phone call to swap it over - isn't this the easiest route to ensure it is allowable?

 

[UK Contractor Accountant]

You are relying on the 'Duality of Purpose Doctrine' as churned out in the HMRC Manuals to argue that the personal mobile charges are not an allowance expense claim for the Director.

Basically this rule states that where there is personal as well as business use of a mobile phone its only the marginal extra cost of the business calls that can be claimed (not the line rental or exclusive minutes package which would have been incurred anyway).

As stated by the OP in his orginal post he uses the phone 100% for business so the Duality principle does not apply here - the expense has been incurred wholly & exclusively for business purposes. All he needs to do is show that the cost was 'neccesarilly incurred' in the performance of his duties and the claim, in my opinioin would be allowable.

Agreed it is much easier to have the mobile phone contract in the company's name - any private use of the phone then becomes an allowable cost for the company.

http://www.contractoruk.com/expenses/contractor_expenses_what_can_and_cannot_be_claimed.html

 

[David Griffiths]

You are relying on the 'Duality of Purpose Doctrine' as churned out in the HMRC Manuals to argue that the personal mobile charges are not an allowance expense claim for the Director.

I presume that you mean me?

No I'm not. I'm referring to the rules for the claiming of expenses by employees, and the rules relating to an employer settling a pecuniary liability of an employee. The deduction will be tax deductible by the company. The question is whether the payment is taxable on the employee as a benefit in kind (yes, in my opinion) and whether the employee can claim a deduction for calls (no, in my opinoin.

Duality of purpose has nothing to do with it.

 

[UK Contractor Accountant]

Shown below is part regarding claiming expenses for telephone from the link supplied above. The credentials of the writer and editor can be found on the website link.

Readers can make their own mind up!

Telephone (Fixed Line/ Mobile)
Only business-related calls can be claimed, the line rental can also be claimed for a fixed line, but only if all calls are business-related

• If a contractor has a mobile phone used purely for business, and they can clearly demonstrate this, then they could claim the monthly tariff of the business phone and the cost of those business calls.
• If they purchased the business phone they could also claim the cost of that phone

 

[teddys]

I can't see why it won't be allowed as a deduction.

The telephone expenses would be an expense payment reimbursed to an employee (director). Therefore, the director would show it as both employment income and expense on his SATR. Expense because it was incurred wholly, exclusively and necessarily in the course of employment (as a director).

 

[Ben5678]

You should set the phone contract up in the name of the company and providing you are VAT registered you can claim back the VAT and the net cost will reduce your taxable profits.

 

[Mart62]

My mobile phone contract is not in my company name so declared it on the p11d expenses form. However because of this they reduced my personal allowance so I have to pay more tax now. It hardly seems worth it really.

 

[UK Contractor Accountant]

My mobile phone contract is not in my company name so declared it on the p11d expenses form. However because of this they reduced my personal allowance so I have to pay more tax now. It hardly seems worth it really.

You are doing it wrong then ! Read the posts above

 

[Andrew Price]

If you are a Ltd company then a full credit check would be required to make it a business contract.

Only sole trader accounts can easily be switched. You can claim as an expense if sole trader. If ltd company the contract needs to be in the business name.

My advice would be to just get a new business sim only line on contract Or vectone are doing unlimited minutes for £10 on payg. But it also depends if the number is important to you. If it is, then a sim only would be your best option as payg bundles can change every month.