HMRC changes view to include smartphones in tax exemption


HM Revenue & Customs (HMRC) yesterday announced a change of view on the tax definition of a mobile phone. Previously, smartphones were excluded from the tax exemption as they were not primarily designed to make or receive voice calls, as this exemption requires.

However, HMRC has now revised its guidance on smartphones, which means these devices can be provided to any number of employees without any tax or National Insurance Contributions (NIC) being payable. It also means certain employees can make a claim for a refund of any tax and NIC paid to date.

Tim Waterhouse, who leads Deloitte’s employment taxes group across Cambridge, Milton Keynes and St Albans says; “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.

“Previously HMRC took the view that smartphone devices were excluded from this exemption, which placed restrictions around what could be provided to employees without a benefit in kind arising. That view has now changed so that the provision of one qualifying mobile device (e.g. smartphone) will be exempt from income tax and may allow provision of smartphones as a tax efficient benefit.”

However, HMRC has said this change applies only to devices primarily designed for voice communication and specifically says a mobile device that only provides Voice Over Internet protocol (VOIP) will not qualify. Therefore tablets and other similar devices remain subject to the existing regime.

Richard Blackwell, tax partner says; “Enterprise mobility is quickly evolving and businesses will appreciate this tax change to recognise the wide use of smartphones by their employees. However, the ongoing challenges are the security and technology to extend business functionality to smartphones and protect sensitive data.” 


The Deloitte Cambridge office comprises 8 Partners and over 250 staff who deliver a full range of professional services to the East Anglian region. As well as focussing on the life sciences and technology sectors for which the region has become so renowned, the office has long standing specialisms in other sectors including the professions, consumer business, food and agribusiness.

Deloitte LLP