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HMRC: What is a mobile phone?

23.02.12

HM Revenue and Customs (HMRC) have finally changed their definition of the mobile telephone, meaning that a smartphone used for work purposes can now be a legitimate business expense, therefore exempt from tax. The change of heart by HMRC had been long-anticipated by workers, mainly due to people’s increased reliance on their iPhone, Blackberry or other smart device.

When the original legislation (on claiming mobile phones as a business expense) came into place in 2006, smartphones and PDAs were excluded, as they were considered to be computers rather than mobile telephones. HMRC claimed that the sole purpose of a work mobile phone should be to make voice-to-voice calls, therefore preventing smartphones from a business expense as they had numerous other features.

Tablets, laptops and satellite-navigation systems are still likely to be taxable – although there is a good chance that HMRC’s stance on these other mobile devices will be reviewed again in the future.

One of the many benefits of being an independent contractor is that you can offset numerous types of business expenditure against your profit, which in turn reduces your overall taxation. This includes either the cost of a phone used solely for business use, or a proportion if the phone is also used for private use. Keeping track of calls with an itemised phone bill is a good way of proving to HMRC that the vast majority of your phone’s usage is for business.

HMRC have many rules and regulations when it comes to claiming business expenses back against your tax. For more information, click here.

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