Mobile phone as a self employed business expense

Sal-238 · 18 January 2019 at 8:05PM

Hi

I am a sole trader and operate as a dog boarder, day carer and walker from my home.

At the moment I am on a £20 a month sim only mobile plan. However, I really need a new phone as mine has had it and I'm wondering whether I can put it down as a business expense.

My mobile does form a huge part of my business. Although most of my calls are incoming and phone providers no longer give itemised bills anyway. I use mine for apps like Whatsapp, messenger, Instagram and Facebook as well as sending an insane amount of texts. I send pictures and videos to my dog 'parents' every day and all of my business is gained using my phone. So, although my bill isn't that large, the hardware itself is used a lot in my business.

The trouble is, how do I prove that? Handsets are expensive and I don't want to take on a lengthy and overpriced contract to get one as I don't use all of my allowances as it is. If I buy a handset for say - £400, would it be reasonable to put half of that down as a business expense?

polymaff · 18 January 2019 at 8:24PM

Just apply the "wholly and exclusively used in the business" to whatever fraction of the costs you think that you could justify. £400 for a handset is a bit much when you could get a reasonable camera-handset for less than £50

Pennywise · 18 January 2019 at 8:34PM

If you use it half for business, half for private, then, yes, half is a reasonable amount to claim as an expense.

tebthereb · 19 January 2019 at 9:10AM

As has been said the principle is that you can only claim expenses “wholly and exclusively” for business purposes. This generally denies relief where there is duality of purpose. Thankfully, it is possible to split costs into “business” and “non-business” is there are identifiable proportions.

The difficulty here might be that identification, i.e. evidence, as the OP suggests. HMRC’s online manual on telephone costs doesn’t say a great deal that is useful for situations such as this where the usage is mainly inbound calls or texts/app usage:

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47820

It does mention that insignificant private use can be ignored. Not sure if that applies here.

So as the OP suggests it’s harder to justify a split when usage leans towards incoming calls, app usage, web usage but I think some phones track activity or will offer apps that do? It might also be possible to get a log from the network provider but I am not sure this would be useful. A separate phone for private use would be another idea but might not be attractive due to cost/practicalities.

I would retain any evidence I could. Even if this was a note to myself about what I think I have used the phone for once a month.

If you were to make a white space disclosure on your tax returns about your approach, whatever you decide, that would also limit HMRC’s window of opportunity to enquire.

What is currently being claimed for the monthly mobile costs? I would suggest the same proportion might be a reasonable one to apply to the handset cost.

I doubt HMRC are going to get too excited about a £400 handset. Another respondent has mentioned you could get one cheaper but I don’t think this is an issue here for the type of business and level of costs. HMRC can in theory restrict costs where they are extreme or lavish relative to the benefit to the business (e.g. small market stall trader making modest profit claims 50% business use of his car legitimately, but it’s a Ferrari) but I can’t see that is relevant here.

trailingspouse · 19 January 2019 at 9:30AM

Alternatively, go down the route of having two phones - one for personal use, and one that's business only. It keeps things simple.
It also means you can set up the answerphone message on your business mobile appropriately, and you can answer the business phone in a professional manner too.

00ec25 · 19 January 2019 at 10:40AM

as a sole trader if you cannot evidence the split of the contract between business and personal through use of an itemised calls cost then the underlying monthly SIM contract cost cannot be split between business and personal with any reliability, so claiming anything would be risky if challenged

insignificant personal use relates to phone contracts where they are in the name of a Ltd company, not sole trader scenarios

tebthereb · 20 January 2019 at 9:47AM

I don’t follow your point there. HMRC say in their Business Income Manual:

“Where private use is not significant, the full cost of telephone and broadband service can be claimed as a business expense.”

Possibly they had landlines in mind here but do you think they would resist the principle being applied to mobiles? I don’t.

Mobile phone as a self employed business expense

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