Mobile Phones

Where an employer provides an employee with a (just one) mobile phone there is no benefit in kind for tax purposes. Consequently, there is no Class 1A National Insurance contribution charge either. But beware! This fact is commonly misconstrued as meaning that there is no tax/NIC on any payment made by employers in respect of mobile phones.

The tax exemption and follow-on Class 1A exemption only apply to mobile phones provided by the employer.

If the employer merely pays the employee's own bills - whether for the purchase of a mobile phone and/or contract charges/vouchers - all the usual rules will apply, the exemption does not apply, and the National Insurance liability on the private element is Class 1 contributions, not Class 1A contributions.

Original source:
AccountingWeb.co.uk
Amended by MacDougall & Co
02-May-2003
Further amendment in April 2006

Information Leaflet