You don’t have to report anything or deduct and pay PAYE tax or National Insurance if the phone is used for business calls only. Salary sacrifice arrangements You do have to report the phone if it’s part of a salary sacrifice arrangement.

What to report and pay

If telephone expenses aren’t exempt , you must report them to HMRC and may have to deduct and pay tax and National Insurance on them. Some telephone expenses are covered by exemptions (which have replaced dispensations). This means you won’t have to include them in your end-of-year reports. You arrange and pay for the phone You must: report the cost on form P11D pay Class 1A National Insurance on the cost Your employee arranges the phone contract but you pay the supplier You must: report the cost on form P11D pay Class 1 National Insurance through your payroll Your employee arranges the phone contract but you reimburse them This counts as earnings so you must: add the amount you reimburse to the employee’s earnings deduct and pay Class 1 National Insurance and PAYE tax through payroll

The value to use depends on who arranges the employee’s telephone line. If you arrange the telephone, the value for reporting and National Insurance is the total cost of line rental and all call charges (business and private). If your employee arranges the telephone but you pay the supplier, you must: report the cost of line rental plus all call charges (private and business) pay National Insurance on the cost of line rental plus private call charges only Salary sacrifice arrangements If the cost of the line rental and all call charges (private and business) is less than the amount of salary given up, report the salary amount instead. These rules don’t apply to arrangements made before 6 April 2017 - check when the rules will change .

The following guides contain more detailed information: telephone charges employer’s premises: employer subscribes for telephone line in the employee’s home telephone expenses

Expenses and benefits: home phones

Overview

As an employer paying your employees’ home phone expenses, you have certain tax, National Insurance and reporting obligations.

Expenses can include:

telephone line rental
business-related call charges
private call charges

View a printable version of the whole guide

Expenses and benefits: home phones

Overview

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Expenses and benefits: home phones

Overview

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