HMRC finally declares smartphones as non-taxable benefits

16 March 2012 | David Widdowson

Both individuals and employers may now be able to reclaim tax and NIC after HMRC alter their view on the tax status on ‘smartphones’.

Tax status of the ’smartphone’

Historically, HMRC have considered that the provision of a single mobile phone per employee can be regarded as tax exempt. However until now, HMRC have taken the view that ‘smartphones’ would not fall within that tax exemption on the basis that their main function was not to make and receive calls.

Significant advances in technology have led to the increase in the number of ‘smartphones’ in the UK and following representations made to HMRC, HMRC have responded by accepting that the provision by the employer of Personal Digital Assistant (PDA) devices such as Blackberry and iPhone should not give rise to a taxable benefit.

Employees who were provided with a single ‘smartphone’ which has been reported as a taxable benefit may now be able to claim a tax refund back to 2007/08. Employers may seek a refund on Class 1A national insurance contributions (“NICs”).

This change will not apply to tablet computers such as the iPad, laptop computers or any similar mobile devices that are not principally designed for voice communication via a telephone network.


HMRC’s changed view is to be welcomed by employers and employees. Many employers may now wish to consider providing additional ‘smartphones’ to employees through salary sacrifice arrangements now there is potential for tax and NICs savings.

For further information or to discuss the issues raised, please contact John Mooney or Guy Abbiss on +44 20 3051 5711.


Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

Related content

13 June 2024
How to apply for certificate of residence in the UK
Where an individual is resident in the UK and has…
29 May 2024
UK Share Plan Reporting 2024: Everything you need to know
The deadline is approaching for the HMRC’s annual return filings…
20 May 2024
Employee Share Plan Reporting 2024: Alerting Your Clients
The UK tax authorities’ (HMRC) submission deadline for annual return…
Subscribe to our newsletter
Stay up to the minute on our latest news and insights?
International reach

We have helped clients meet their HR needs in over 70 countries across five continents.