Business Mobile Phone Expenses
As a limited company business owner, understanding how to claim mobile phone expenses correctly can help reduce your tax liability. However, there are specific rules regarding what can and cannot be claimed, depending on whether the contract and phone are in your business name or your personal name.
Claiming Business Mobile Phone Expenses
If the Contract is in the Business Name
If your business takes out a mobile phone contract in its name (i.e., your business name appears on the invoice as the customer), then:
The full cost of the contract can be claimed as a business expense.
Any VAT paid can be reclaimed if your business is VAT-registered.
The cost of the handset itself can also be claimed as a business expense.
There is no taxable benefit for employees (one phone per employee).
If the Contract is in Your Personal Name
If the phone contract is in your personal name, you cannot claim the monthly contract fee as a business expense, even if you use the phone for work. In the past, business owners would often claim for additional costs incurred for business use, such as:
International calls made for business purposes.
Additional charges for business-related data usage.
Any other extra charges that can be directly attributed to business activity.
However, in reality, additional business-related costs are now quite rare. Most UK mobile contracts include unlimited calls and data, meaning there are usually no extra charges to claim. Furthermore, international business communication is often conducted via WhatsApp, Zoom, or other video call services, which do not incur additional costs. As a result, most business owners with personal contracts find they have little to nothing to claim.
Claiming the Cost of the Phone Itself
Even if you choose not to claim the monthly contract cost, it does make sense to purchase the phone through the business. However, for the phone’s cost to be a valid business expense:
The invoice must be in the business name.
The business should pay for the phone directly.
The phone should primarily be used for business purposes.
By doing this, the phone becomes a company asset, and the full cost can be claimed as a business expense. If VAT is charged, it can also be reclaimed if your business is VAT-registered.
The Business Contract Premium – Is It Worth It?
Business phone contracts often come at a premium compared to personal contracts, with higher monthly fees and sometimes less flexibility. For this reason, some business owners choose not to have a business phone contract as this approach can be more cost-effective.
Business Contract Providers
If you're considering a business mobile contract, here are some providers to explore:
O2 Business Plans: O2 Business Mobile Contracts
Vodafone Business Plans: Vodafone Business Mobile Contracts
EE Business Plans: EE Business Mobile Contracts
Key Takeaways
If the mobile phone contract is in your company name, you can claim the full cost, including VAT.
If the contract is in your personal name, additional business-related costs are now quite rare and often not claimable.
Business phone contracts often come at a premium, so it may not always make financial sense to claim the contract as a business expense.
Purchasing the phone through the business (with the invoice in the company’s name) is a valid tax-deductible expense.
What If You’re a Sole Trader?
If you are a sole trader, the rules are different. Instead of claiming the full cost of the contract or handset, you must apportion a percentage of the total cost between personal and business use. This means:
You can only claim a proportion of the contract cost based on the percentage of time you use your phone for business.
The same applies to the handset purchase – only the business-use portion is deductible.
VAT can only be reclaimed on the business-use proportion if you are VAT-registered.
By following these guidelines, you can ensure that you are maximising your tax benefits while remaining compliant with HMRC regulations.