Taxman extends tax exemption to smartphones

EMPLOYEES WHO are given smartphones by their employers will no longer have to pay tax or national insurance contributions (NICs) for them, HM Revenue and Customs (HMRC) has said in new guidance.

Previously, smartphones were only to be exempt from tax if they were provided by the employer solely for business purposes. This tax exemption was, therefore, unlikely to apply to everyone, according to Deloitte.

Some employees can make a claim for a refund of any tax and NIC paid to date, according to Deloitte.

James Warwick, a partner in Deloitte’s employment taxes group said; “HMRC’s advice is that a smartphone is a mobile phone, despite its extra capability. This change is good news for employees as it means there’s no tax or NIC to pay on their first work mobile phone, regardless of how much the employee uses it privately.”

However, HMRC has said the tax exemption applies only to devices primarily designed for voice communication and specifically says a mobile device that only provides Voice Over Internet protocol (VOIP) – a technology for making free or cheap calls over the Internet – will not qualify. This means that tablets and other similar devices will remain subject to the old tax rules.


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