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As an employer paying your employees鈥� home phone expenses, you have certain tax, National Insurance and reporting obligations.

Expenses can include:

• telephone line rental
• business-related call charges
• private call charges

You don鈥檛 have to report anything or deduct and pay PAYE tax or National Insurance if the phone is used for business calls only.

Salary sacrifice arrangements

You do have to report the phone if it鈥檚 part of a salary sacrifice arrangement.

If telephone expenses aren鈥檛 exempt, you must report them to HMRC and may have to deduct and pay tax and National Insurance on them.

You arrange and pay for the phone

You must:

• report the cost on form P11D
• pay Class 1A National Insurance on the cost

Your employee arranges the phone contract but you pay the supplier

You must:

• report the cost on form P11D
• pay Class 1 National Insurance through your payroll

Your employee arranges the phone contract but you reimburse them

This counts as earnings so you must:

• add the amount you reimburse to the employee鈥檚 earnings
• deduct and pay Class 1 National Insurance and PAYE tax through payroll

The value to use depends on who arranges the employee鈥檚 telephone line.

If you arrange the telephone, the value for reporting and National Insurance is the total cost of line rental and all call charges (business and private).

If your employee arranges the telephone but you pay the supplier, you must:

• report the cost of line rental plus all call charges (private and business)
• pay National Insurance on the cost of line rental plus private call charges only

Salary sacrifice arrangements

If the cost of the line rental and all call charges (private and business) is less than the amount of salary given up, report the salary amount instead.

These rules don鈥檛 apply to arrangements made before 6 April 2017 - check when the rules will change.

The following guides contain more detailed information: