The Financial Times

Flexphone - Tax break to ease mobile phone bills By Robert Budden

Employers and employees could save hundreds of millions of pounds on their mobile phone bills under a scheme exploiting tax breaks.

Legislation introduced by the 1999 Finance Act already allows employees to cut the cost of buying a computer by taking payments from gross salaries, thereby cutting tax and national insurance. These tax breaks have been taken up by a number of companies such as BT Group.

Now BDO Stoy Hayward, the accountancy firm, has come up with a way of applying the scheme to mobile phones. The move could cut 41 per cent off mobile phone costs.

Employees can buy a handset and pay their bill out of their gross salary, giving them tax relief on their mobile phone costs.

For employers, the reduction in gross annual salary should also result in smaller national insurance payments.

Users are able to choose any handset running on any mobile phone network and can buy up to five phones out of their gross salary, provided they are for personal use or used by other household or family members.

According to Ofcom, the telecommunications regulator, annual mobile phone bills average about £480. BDO Stoy Hayward estimates that a company with a workforce of 1,000 mobile phone users would save more than £61,400 a year, based on typical usage. One of the first users of the scheme is British American Tobacco, the tobacco group.

Earlier this year the government relaunched its scheme that allows employees to save up to 50 per cent on the price of home computers under interest free company loan schemes.

The scheme allows staff to buy computers with an interest-free loan recovered from their salaries over three years. The 50 per cent saving is achieved because loan deductions are taken from gross salaries, cutting tax and national insurance.

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

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