Did you know that one mobile phone may be given to every employee in your business – including you and any family members that are employed – and there is no tax or National Insurance Contribution regardless of whether the phone is used for personal calls and apps. In this blog, we will explore six benefits associated with providing mobile phones to your workforce.
Income Tax Exemption: When a company provides mobile phones to its employees, the cost of the phone and its usage is considered a tax-free benefit, exempt from income tax. This means that employees do not have to pay tax on the value of the phone or the cost of the service plan. It's a valuable perk that can enhance your compensation package and help attract top talent.
Corporation Tax Deduction: From the employer's perspective, the cost of providing mobile phone contracts to employees is usually tax-deductible as a business expense. This deduction can reduce your company's taxable income, ultimately lowering your corporation tax liability. It's a win-win situation: employees enjoy the benefits of mobile phones, and the company gets a tax break.
Capital Allowances: Businesses may be eligible for capital allowances on the purchase of mobile phones and related equipment. Capital allowances allow you to deduct the cost of these assets from your taxable profits over time, reducing your overall tax liability.
Simplified Reporting: Providing company mobile phones can simplify the reporting and record-keeping process for both employers and employees. Instead of employees having to track and report their business and personal phone usage separately, the company can cover all costs, making it easier to manage expenses and tax compliance.
Enhanced Productivity: While not a direct tax benefit, providing mobile phones can enhance employee productivity, which can indirectly lead to cost savings and increased profitability. Faster communication and access to work-related apps and tools can help employees get work done in less time.
Employee Retention and Recruitment: Offering company mobile phones as part of your benefits package can be a powerful recruitment and retention tool. It demonstrates that you value your employees and their connectivity, potentially reducing turnover and recruitment costs in the long run.
In conclusion, providing company mobile phones to employees can offer a range of tax benefits while simultaneously improving communication, productivity, and employee satisfaction. It's essential to consult with a tax professional or accountant to ensure that you are maximizing the available tax advantages while staying compliant with local tax regulations. By doing so, you can create a more attractive and efficient workplace while optimizing your tax position.