Can I Claim My Phone As a Sole Trader?
Yes, as a sole trader, you can claim your phone as a business expense if it’s used primarily for business purposes. However, you should keep detailed records for HMRC for tax deductions.
If you would like to read more information or learn more about the pricing of business mobile phones, you can do so here .
How to Figure Out if You Can Claim A Phone as a Business Expense
Business Use Proportion: You can only seek reimbursement for the portion of your mobile phone expenses directly linked to your business activities. You cannot claim the entire bill if your phone is predominantly used for personal calls and texts. You should monitor your business and personal usage using call logs, apps, or dedicated tools. You can estimate the proportions based on a fair and honest assessment.
Methods of Claiming:
Simplified Expenses Method: If your total business expenses are less than £8,500 per year, you can claim a standard deduction of £1,000 annually without detailed records.
Actual Costs Method: This approach entails maintaining meticulous records of your mobile phone bill and segregating personal and business expenses.
Tax Implications: You can deduct the allowable portion of your phone bill from your business income before calculating your tax liability, potentially reducing your overall tax burden. Remember to retain all relevant documentation, such as receipts and usage logs, as evidence of your business-related expenses in the event of an HMRC audit.
Additional Considerations:
Separate Phone Number: Consider obtaining a separate phone number for business calls to simplify expense tracking.
Business Phone Contract: A dedicated business contract might offer more economical features and data plans if your phone is extensively used for business purposes.
Seek Professional Advice: If you are in doubt, speak to an Accountant or qualified financial advisor.
What to Claim As Phone Expenses
Expenses Associated with Mobile Phone Purchase: This encompasses the expenditure on the mobile phone itself, along with the contract and call charges.
Extra Call Charges: These may apply if you opt for an itemised bill. Should you deplete your inclusive minutes and incur additional call charges for business and personal calls, the expenses can be claimed for your business-related calls.
Pay as You Go (PAYG) Mobile : Such costs are deemed marginal and are eligible for expense claims.
Value Added Tax (VAT): If you are VAT registered, you are entitled to reclaim the VAT portion linked to your mobile phone expenditures.
Our Thoughts on Whether to Claim If You Are Self-Employed
Opting for a dedicated mobile phone or SIM solely designated for business activities might streamline expense tracking, as this approach enables you to claim all associated costs without complication. If you purchase your phone handset separately, you can reclaim a portion or the entirety of the expense. However, personal usage must be factored into the equation. You may apply the same percentage of personal use calculated for calls to the handset cost.
It’s important to note that if you’re VAT registered, you can only reclaim VAT on the portion of mobile costs attributable to business usage. If you operate your own limited company, distinct regulations apply. You have the liberty to deduct all business expenses from your profits prior to taxation. However, any item utilised for personal purposes must be reported as a company benefit.
Claim my Phone as a Sole Trader & more related articles:
Hi, I’m Ally Cox, one of the leading Copywriter/Bloggers at CompareYourBusinessCosts.co.uk, a platform renowned for its in-depth analysis and comprehensive comparisons of business services. With over a decade of experience in the industry, I bring a wealth of expertise in areas such as leased lines, VoIP, business energy and office solutions, HR solutions, accounting, and payroll services, among others.
My journey in the industry began over 10 years ago, and my extensive knowledge enables me to provide invaluable insights to our users and customers. Prior to joining CompareYourBusinessCosts, I’ve been involved in various business ventures, gaining hands-on experience in HR and copywriting across a multitude of different sectors, gaining valuable knowledge about everything from clocking in systems to card machines, EPOS systems, payroll services, and so much more.
My mission is to simplify the often-complex buying process for businesses, helping them streamline their product and service comparisons effectively. By leveraging the expertise I’ve acquired over the years, I aim to assist businesses in making informed decisions that enhance their efficiency and bottom line.