Almost every modern business incurs costs for communication, and your contracting business is likely no exception. It’s often difficult to work at all without a phone and an internet connection. So, when you’re claiming expenses, which of these can you claim for?
As with all business expenses, the guiding principle is that all expenses must be incurred wholly, exclusively and necessarily in the course of your business. If your business costs can’t be separated from personal costs then you can’t claim them.
Claiming expenses for a phone line
If you’re using your home phone line, you can claim for the cost of any business calls you make. You can’t claim for any part of the line rental, as you would have incurred this cost if you hadn’t made any business calls. If your business calls have not increased your phone bill, (for example if the minutes were included in your phone package) or the business and personal costs can’t be clearly separated, you also cannot claim.
If you have a separate phone that you only use for business, for example if you have a dedicated line in your home office and a separate line for personal use, you can claim for the cost of the dedicated line. This will include the line rental and the cost of any calls.
Claiming for a mobile phone
If you’re making business calls on your personal mobile phone, again it comes down to whether you’ve incurred an additional cost, and the extent to which that cost can be separated from your personal bill. If any calls you made were included in your mobile package, or if you can’t pick out the cost of your business calls on an itemized bill, then you can’t claim for them. If you can separate the cost of your business calls you can claim for them, but not for any other part of your bill.
Alternatively, your company could provide a business mobile phone for you. A new contract should be set up in your company name, and the bill paid from your business bank account. HMRC have published a specific exemption that allows for reasonable personal use where an employer provides a phone to an employee. Under these rules the whole cost will be allowable as an expense and there will no benefit in kind charge.
Claiming for a broadband connection
Claiming expenses for business use on your personal broadband connection is likely to be problematic. Even if your business usage has increased the bill, it’s often difficult to identify the additional costs specifically as business use. Once again if you can’t separate the business cost from personal use, you’re not allowed to claim it.
If you have no personal internet connection and you’re setting one up specifically so you can work from home, then you can claim the whole cost. The contract should be set up in your company name and paid for from your business account. “Limited” personal use of your business connection is allowed, but you should take care that it is only occasional use.
If you have any questions about claiming expenses or if Orange Genie can help in any way at all, please contact our expert team on 01296 468483 or email info@orangegenie.com.