How (and what) you expense depends on the type of company that you own.
- If you are a sole trader and want to expense your phone bill to your company click here
- If you have a limited company and want to expense your phone bill to your company click here
If you are a sole trader and want to expense your phone bill to your company:
You are only allowed to expense your business related phone calls or activity. So this will usually be a portion of your phone bill, not the entire cost.
A good way to work this out is take a couple of months phone activity, and analyse the proportion of business activity, then you can use this for the rest of the year.
If you are VAT registered, then you can only claim the VAT on the portion of your phone bill that is considered business.
If you have a limited company and want to expense your phone bill to your company
There are three ways to expense your phone bill to your limited company:
- Put your phone bill in the name of your limited company, and the payment comes straight out of the business bank account.
- Report the payment of your personal phone bill as a benefit in kind, and declare it on your P11d. Your phone bill will be paid for by the business bank.
- If you pay and the company reimburses you, you have to deduct the payment on PAYE and Class 1 NICs on the value of the monthly contract. If you go over your normal plan, you also have to declare this.
If your phone bill is in the name of the limited company, you can expense the whole cost. The main rule is that anything personal should be reasonable and not excessive. Essentially if you primarily use the phone for business but occasionally call a friend, that’s fine. If you only make one business phone call a month and the rest of the time you are using your phone for personal use, then HMRC will disqualify this.
If your phone bill is reported as a benefit in kind, or deducted from your PAYE and Class 1 NICs, you can only reclaim the VAT on the business expense.
If you are unsure on whether you are allocating your costs correctly, and would like a quick review to go through it, book a call with us here!