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HMRC changes view on smartphones - are you due a tax refund?

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9 March 2012
HMRC has announced a change in view on the tax definition of a mobile phone. So if you provide an employee with a smartphone (or you as an employee are provided with a smartphone) it is now exempt from tax and National Insurance Contributions (NIC).

Previously HMRC had argued that smartphones such as BlackBerries and iPhones were not primarily designed to make or receive voice calls and were therefore not mobile phones.
 
HMRC has said that the mobile phone exemption does not apply to sat navs, tablets (such as iPads) and laptops. The only way these devices
 
can be provided tax free is if they are provided solely for business purposes and any private use is minimal. HMRC has said that it cannot be certain how the definition of a 'mobile phone' will apply to new devices in the future, so depending on technological innovations things could change again.

The mobile phone exemption only applies to the first mobile phone per household per employer. 

What does this mean?

If you provide an employee with a smartphone it no longer needs to be shown on the employee's form P11D or included in a PAYE Settlement Agreement.    

Can I reclaim any tax and NIC?

If you have paid tax and NIC on the provision of smartphones at any time since 6 April 2007 you should be able to reclaim any amounts paid. This applies to both the employer and employee.

What next?

If we do your P11Ds for you, we will be reviewing the position for you as part of this year's P11D preparation.

If you want to find out more or would like us to evaluate any tax refund you may be due please don't hesitate to get in touch.