Claiming mobile phone expenses
Claiming mobile phone expenses
A mobile phone is something that every business cannot be without! Many people run their businesses from their mobile phones so it’s only right that you should be up to date when it comes to what you’re entitled to claim back against your business. In this blog we will compare what mobile phone expenses you can claim if you’re a Sole Trader or a Limited Company.
Sole Traders
Claiming expenses as a Sole Trader can sometimes be a grey area due to the fact that some things may be considered to be used for personal use as well as business. Mobile phones are one of these things so you have 2 options.
- You can purchase a phone solely dedicated for business use only
- You can use your personal mobile
If you choose to purchase a dedicated business mobile phone then you can claim the whole cost back of purchasing the phone and the monthly tariff. If you’re VAT registered you can of course claim back the VAT too.
If you use your personal mobile for business use then you can only claim the cost for business use. You will need to come up with a reasonable way of calculating this. There is no set way of doing this but you may need to clarify how you’ve got to the calculation if HMRC are ever to ask you.
One way of calculating this is to work out what percentage of calls are business related and which are personal. However nowadays it’s not just calls we use our mobile phones for, so you may see fit to calculate the overall time spent on your phone for things like text messages, the use of software apps such as Xero and Dext, online banking, internet usage and emails. Whichever way works best for you is fine but just make sure you calculate the percentage and keep a record of how you have done this. Subtract the percentage of personal use from the full cost and this will leave you with the amount which you can claim through your business.
Limited Companies
As a company director you can claim back the full cost of your mobile providing you only have one mobile per director for business use. You can also claim back the cost of mobile phones provided to employees but all phone bills must be in the name of your limited company for it to be classed as an allowable expense. This rule is regardless of whether or not the mobile phone is used for both business and personal use.
If your limited company is VAT registered you can also recoup the cost of any VAT applied too.
If you’re unsure of what business expenses you can and can’t claim it’s always wise to seek professional advice. You don’t want to be claiming for things which HMRC don’t class as a tax deductible expense. Nor do you want to be failing to claim for things which you are entitled to claim.
