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Business Update: Mobile phones for employees

Employers may provide many benefits to employees in addition to their salary or wages. Some of these benefits can be tax-effective, in that the employer or employee (or both) may save tax by providing a benefit rather than cash.

Normally if an employer provides an asset to an employee for their personal use, the employee has to pay tax at the rate of 20 per cent of the asset’s value for a whole year.

A mobile telephone is specifically exempt from tax under Income Tax (Earnings and Pensions) Act 2003 section 319.
This means that when an employer provides a mobile telephone to an employee, the employer can deduct the cost of a mobile telephone from taxable profits but the employee does not have to pay tax on the benefit of being provided with the telephone even for private calls.

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