The Guardian: Jobs & Money

Is your firm a smooth operator?

First it was a tax break for buying a home computer. Then came bikes. Now, writes Miles Brignall, it's mobile phones.

How would you like to save at least a third of the cost of your family's entire mobile phone bill? Then look no further than the latest income tax saving scheme for employees.

Over the past few months, Jobs & Money has highlighted two little-known tax breaks that save employees money on home computers and bicycles.

In both cases, the employer buys the item and then recoups its cost from the employee's earnings. All deductions are taken from gross earnings, allowing the purchase to be made with untaxed income, and before national insurance is deducted. Now a large accountancy firm has announced it has come up with a similar scheme to let employers buy mobile phones for its staff.

As with the home computer initiative (HCI), there is no requirement to use the mobile phone for work - a mobile acquired in this way can be entirely for personal use. Participating employees can request up to two mobile phones for themselves and up to a further three for family and household members.

The man behind the scheme, Shawn Healy of BDO Stoy Hayward, says it works in almost exactly the same way as the HCI - which has proved very popular among the staff working at companies that have offered it. "We have spent a year or so developing the phone scheme and, after offering it to a limited number of our own staff, have fine-tuned it to the extent we are now opening it up to a wider audience.

"Just as with the HCI scheme, the employee selects the mobile phone they want, plus the year-long airtime contract that best suits their needs. The employer buys it on their behalf and then deducts the cost from wage packets.

"The employee gets to save at least 33%. Anyone earning more than £31,000 will save 41% on the cost of the total package," he says.

To administer the scheme on the employers' behalf, BDO Stoy Hayward has gone into partnership with Isis Telecommunications, an independent company that supplies mobile services to businesses.

Those signing up for the scheme, which is branded under the name Flexphone, can opt for an airtime package with any of the major UK networks. Anyone who already has an existing mobile but wants to upgrade to a new phone bought through the scheme, will be able to keep their existing number.

Mr Healy says the scheme has the full approval of the Inland Revenue, and is being sold to large companies on the basis that it can save 12% on their participating employees' NI payments, plus the fact that the company will have to buy fewer mobiles for staff. It is also seen as a benefit that employees will particularly value.

How much money staff will save depends on their call volumes. There are estimated to be around 50m mobile phone in the UK, costing their owners an average of £480 a year. Mr Healy says an average user will save £158 a year if they are lower rate taxpayers, and £197 for higher rate taxpayers. A high earner taking the maximum five phones could save almost £1,000 a year.

"There are real benefits for both the employee and the employer. The staff member has access to the latest handsets coupled to access to a mobile phone contract, without credit checking. The employer has a happy workforce and a financial saving.

"We estimate that a company signing up 1,000 members of staff would save £61,400, given average phone use. There is no cost to the employer as we share the revenue generated by the phone sales with Isis," he says.

For this reason it looks likely to be restricted to larger companies, or those that are particularly keen to offer such benefits. Only those whose employer is prepared to adopt the scheme will be able to participate. If the employee leaves the company, the employer's liability for call charges ends immediately, says Mr Healy.

To find out more about Flexphone email info@flexphone.co.uk or call 0845 408 2035.

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