There are various stipulations regarding the use mobiles and landlines for business purposes, and it is advisable to familiarise yourself with these before entering into any new contracts.
Home telephone
HMRC is very particular about what telephone costs may or may not be paid for by your company, and you should therefore keep a careful record in order to minimise the possibility of any future enquiry on this.
You should keep your main home telephone number in your own name and pay this out of your personal bank account, but if this telephone is also used for business calls, you should recharge the company for the business calls. You may also subscribe to other services accessed via the telephone, and if any of these services are used partly for business, you should also pay for these yourself and recharge the company for a proportion in the same way.
If these other services are used exclusively for business you should arrange for them to be invoiced directly to and be paid for by your company.
Your company should not pay for the basic rental, but may pay for equipment and the proportion of the calls and options (e.g. the cost of call diversion, call waiting, etc.) that relates to the business.
Calculation of an appropriate proportion is not a precise science, but HMRC will usually accept a reasonable percentage based on the experience of your first year, supported by itemised bills, etc. If your company pays any more than a reasonable figure, the excess must be declared on your P11D and income tax at your highest rate must be paid on the benefit. There would also be a national insurance liability.
If your home telephone is particularly important to you in your work, you could arrange for it to be classified as a business line, in order to increase the level of maintenance provided, whilst still keeping it in your own name. Alternatively, if you are spending a lot on business calls from home, you might choose to install a second line in the name of, and paid for by, your company.
Mobile phones
Your company may pay the cost of using a mobile phone, including rental and private calls, provided the contract is in the name of the company. Only one mobile phone per employee is allowed. If the contract is not in the company name, only the cost of business calls over and above the airtime package can be claimed.
If the airtime package cost is claimed and the company pays the provider direct then the cost must be declared on the P11D as a benefit in kind. There will also be a national insurance liability.
If the airtime package cost is claimed and the company reimburses the employee then the cost must be treated as gross pay and PAYE and NI will be payable.
We do not recommend that you claim the airtime package cost, as the overall cost to you will be higher than if you did not claim it through the company.
Internet costs
Your company may pay the cost of subscription to an Internet Service Provider for internet access to your home provided the contract is in the name of the company. If the contract is not in the company name none of the costs can be reclaimed.