Written by Richard Rowell
Published on May 26, 2010

We are now in the middle of P11D season and one interesting point has come to light regarding the recent HMRC revisiting of mobile phones.

For a number of years now there has been no benefit in kind for mobile phones supplied to directors or employees. This has included the line rental and the cost of any private calls when the telephone is provided because of the employment.

However, the HMRC have recently reviewed their position regarding the new wave of smartphones. This includes iPhones and Blackberry's. As smartphones combine the function of a mobile phone with that associated with a computer, HMRC do not consider such devices are a mobile phone for the purposes of exemption under Section 316 ITEPA 2003.

If the equipment is supplied to a director or employee for business purposes and any private use is 'not significant', it will be exempt for tax purposes, in the same way as a mobile phone. HMRC have not provided a definition of significant nor have they yet challenged the provision of a smartphone.

Smartphones supplied on the same terms as a mobile phone, i.e for business use (personal use is incidental), or replacing a mobile phone previously supplied for business use then a P11D entry will not be required and there should not be any tax consequences.