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Exemption for provision of mobile phone

The provision of mobile phones to employees is a common benefit. There is a general exemption from tax and NIC. In some circumstances, a tax and NIC liability may arise.

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

1. •

   the provision of one mobile phone to an employee (the employer must retain ownership of the mobile phone). In this context, ‘mobile phone’ can include a physical phone with a sim, just a sim, or multiple items for different connections as long as the connections relate onto to one phone number

2. •

   the line rental and the cost of all calls associated with that mobile phone

The exemption covers any amount of private use. For practicality, employers are likely to limit use outside the limits of the phone’s regular contract cost to limit their cost, but this does not affect the PAYE position.

HMRC guidance is at EIM21779. See more in Simon’s Taxes E4.779A

Where an employee is required to use a mobile phone for business calls, then the cost