December 3rd, 2019

The Jonathan Ford & Co Advent Calendar – Day 3

 

Over the course of the festive season we’ll be bringing you an advent calendar’s worth of tax and financial tips.  Some of them might even be a little Christmassy!  On the 3rd day of advent, I gave the staff…

Mobile phones

Our next advent tip only applies to limited companies.  Mobile phones – both the cost of the handset and the usage charges – qualify as tax free benefits.  This means if you provide your staff with a mobile phone then they won’t pay tax on the costs the company pays.

In fact, mobile phones are a great way of giving staff a pay rise without you incurring employer National Insurance Contributions or employer pension contributions.  For example, if a phone is replaced every two years and costs £1,000 while the tariff costs £20 per month.  The cost of this works out at £740 per year.  A basic rate taxpaying employee would need to earn an extra £1,150 before tax per year in order to pay this cost personally.

We won’t bore you with the calculations at this time of year, but the phone and tariff in this example would cost you £510 per year while paying the staff member the additional salary would cost you £1,115 per year.  It’s probably worth reading that sentence again.

Beware: This very favourable treatment only applies if the company pays for and owns the phone and the company directly contracts with and pays the provider of the monthly tariff.

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Limited Companies National Insurance Contributions Tax Advice

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Director

John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.

After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later. John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.

Outside of work, John enjoys keeping fit and is a Liverpool FC season ticket holder.

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