In most circumstances the provision of one mobile phone to a director or employee for private use is exempt from a benefit in kind charge. The exemption covers the phone itself, any line rental and the cost of private calls paid for by the employer on that phone. However there are many types of devices that have telephone functionality which do not qualify as mobile telephones. Until recently HMRC took the view that smartphones were in this latter category
HMRC define mobile phones as an “apparatus designed or adapted for the primary purpose of transmitting and receiving spoken messages and used in connection with a public electronic communications service”. They have now changed their view on smartphones and accept that the fact that a device can also be used for other functions will not prevent it from falling within the meaning of “mobile phone.”
As this is an area of changing technology HMRC have limited this to apply to smartphones as configured and understood at the start of 2012. Employers that provide a smartphone in 2011/12 should treat it in the same way as any other mobile phone moreover they may be able to claim a repayment of class 1a NI contributions on smartphones provided for 2010/11 and years back to 2007/2008. Employees will also be able to claim back any tax that they have paid if their smartphones have been treated as a taxable benefit in kind.
Examples of apparatus that does not fall within the definition of a mobile phone include satellite navigation devices, devices that are solely PDAs and tablet and laptop computers.
If you would like any further information please or help claiming a refund then please contact the team on 01733 371180.