HMRC alters stance on employee smartphones

Smartphones such as BlackBerrys and iPhones which are provided by employers to employees will no longer be subject to tax as a ‘benefit in kind’, HMRC has announced.

The change of heart from HMRC means that many tax payers may be able to reclaim hundreds of pounds in tax refunds from the last few years.

HMRC had originally classified smartphones as personal digital assistants (PDAs) and not conventional mobile telephones in the view that they were not originally designed for the primary purpose of transmitting and receiving calls or in connection with a communications service provider. This has meant that unlike ordinary mobile phones, which can be provided tax free to employees, smartphones have been treated as taxable benefit.

However, technological advances since their emergence in 2007, and their increasing popularity, mean that HMRC has now acknowledged they conform to their definition of ‘telephone apparatus’ and will therefore no longer be subject to tax.

HMRC admits that many people may have already assumed that smartphones were already covered by the mobile phone exemption and included in the benefit of a PAYE settlement agreement. However, those wishing to seek repayment can do so by contacting HMRC.