Avoiding Tax on Your Home Phone

The phone bill of a home phone paid by the company can be considered as a taxable benefit-in-kind for employees and as a result can lead to a NI bill for the employer. Are there any ways to supply a phone to your employee but to avoid tax and NI.

In many businesses, there is a need for directors and some important employees to make and receive work calls whilst at home. But what are the tax consequences of the company paying for this?

A simple administrative approach to settle the bill would be to pay a cash allowance towards employees’ telephone costs. It is then left to the employee to claim a deduction on their tax return for the actual cost of business calls. Both income tax and NI (employees’ and employers’) is payable on the rental plus all private calls. Put the allowance through your payroll as a taxable addition to wages/salary. Otherwise you might end up with a surprise bill after a PAYE visit.

The classic solution here is to have the telephone bill in the name of the company not the employee. The advantage of this is that you don’t have to put it through your payroll because it is now classed as a benefit-in-kind.

Though it may seem as simple, there are many complications involved. For more advice contact your nearest accountant. Or tax advisor. KVS Accountants serve as accountants and tax advisors for small businesses in and around South London, South West London and West London. Contact KVS Accountants on 020 7731 6131 to arrange a free no obligation appointment to discuss your tax queries.

 

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