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ExpensesUpdated 2026-02-12

Can I claim my phone bill as a business expense?

Quick Answer

Yes, but only the business portion. If you use a personal phone for work, you can claim the percentage used for business. A phone contract in the company's name is simpler and fully deductible.

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Detailed Explanation

Claiming phone expenses through your limited company

Phone bills are a common and legitimate business expense, but the rules depend on how the phone is set up.

Option 1: Company phone contract (simplest)

If the phone contract is in the company's name

- The full cost is a deductible business expense - VAT can be reclaimed on the full amount - No Benefit in Kind tax if the phone is provided primarily for business use - Some incidental personal use is allowed without triggering BIK

This is the recommended approach for most directors.

Option 2: Personal phone, claim business proportion

If you use your personal phone for business: - Only the business proportion is claimable - You need to determine a reasonable split (e.g., 60% business, 40% personal) - The company reimburses you for the business portion - Keep itemised bills to support your claim - VAT recovery is more complex (usually can't reclaim on personal contracts)

How to calculate the business proportion

Method 1: Itemised bill review - Go through a sample month's calls and data usage - Identify business vs personal calls - Calculate the percentage - Apply consistently

Method 2: Reasonable estimate - Assess your typical use pattern - 60-80% business use is common for directors - Document your basis - Be prepared to justify to HMRC

What counts as business use?

  • Calls to clients and suppliers
  • Business emails and messaging
  • Using apps for business (accounting, scheduling, travel)
  • Hotspot for business laptop
  • Business-related internet research

What about a second phone for business?

If you get a separate phone purely for business: - Full cost is deductible - Best to put the contract in the company's name - Eliminates the need to calculate proportions - Clean separation of business and personal

VAT on phone bills

- Company contract

Full VAT recovery - **Personal contract with business use

Home broadband

Similar rules apply to home broadband: - If working from home, claim the business proportion - Or include it in the £6/week flat rate home office allowance - A dedicated business broadband line is fully deductible

Record-keeping

  • Keep phone bills for 6 years
  • Document your business use percentage calculation
  • Keep a sample of itemised bills
  • Review and update the proportion annually

Source: HMRC Mobile Phone Expenses Guidance

Real-World Examples

Sole trader using personal mobile for business

Sarah is a freelance graphic designer. She estimates that 60% of her mobile phone usage is for client calls, emails, and accessing design resources. She can claim 60% of her monthly bill as a business expense, keeping records to justify the percentage.

Director with company phone and personal use

John's limited company pays for his iPhone. He uses it primarily for business, but also makes personal calls. The company can claim the full cost, and there's no Benefit in Kind tax as long as the personal use is considered 'minor and incidental'.

Claiming phone accessories

A marketing agency purchased noise-cancelling headphones for their staff to use while working remotely and taking client calls. The headphones are used solely for business purposes, making them a fully deductible business expense.

Common Mistakes to Avoid

  • Claiming the full amount of a personal phone bill without accurately calculating and documenting the business usage percentage.
  • Failing to keep records to support the business usage percentage claimed, making it difficult to justify to HMRC during an audit.
  • Not accounting for VAT correctly; you can only reclaim VAT on expenses directly incurred by the company.
  • Assuming incidental personal use of a company phone is always acceptable and not a BIK; significant personal use should be declared.

What if I upgrade my company phone? Can I claim the cost?

Yes, the cost of upgrading your company phone is a deductible business expense, and you can reclaim the VAT. Ensure the phone is primarily for business use.

How do I determine the 'business use' percentage of my personal phone?

Review your call logs, data usage, and time spent on business-related apps. A reasonable estimate, documented clearly, is usually sufficient, but be prepared to justify it to HMRC.

Can I claim for a separate phone line I use exclusively for business at home?

Yes, if you have a dedicated landline used only for business at your home, you can claim the full cost as a business expense. This is separate from mobile phone expenses.

What records do I need to keep for phone expenses?

Keep copies of your phone bills, clearly marked with the percentage of business use if it's a personal phone. If it's a company phone, keep records demonstrating it's primarily used for business.

Practical Tips

  • Use a time-tracking app or spreadsheet to accurately record the amount of time you spend using your phone for business purposes.
  • If business use is significant, consider getting a separate business phone contract to simplify accounting and avoid Benefit in Kind issues.
  • Review your phone bills regularly to identify any unusual charges that may not be business-related and adjust your claim accordingly.
  • Set up a clear policy within your company regarding personal use of company phones to avoid any potential tax implications or misunderstandings.

Related Questions

What expenses can I claim through my company?

You can claim expenses that are 'wholly and exclusively' for business purposes. This includes travel, equipment, professional subscriptions, training, marketing, and business insurance.

Can I claim working from home expenses?

Yes. Your company can pay you £6/week (£312/year) tax-free for working from home. Alternatively, you can claim a proportion of actual home costs based on business use.

What expenses reduce Corporation Tax?

Most genuine business expenses reduce your Corporation Tax bill, including salaries, rent, utilities, professional fees, travel, equipment, and pension contributions. The expense must be 'wholly and exclusively' for business purposes.

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