Claiming mobile phone expenses through a limited company is one of the simplest legitimate tax wins available to UK directors — but only if you set it up the right way. The difference between a company contract and a personal one decides whether your phone is a clean, fully deductible expense or a paperwork headache with benefit-in-kind risk. This guide explains the rules for 2026, and how they connect to choosing the right business mobile contract in the first place.
Claiming mobile phone expenses through a limited company: the three routes
There are three ways a director or employee can run a mobile phone alongside a limited company. They are not equal.
1. Contract in the company’s name (the clean route)
The company takes out the contract, the company pays the bill, and the phone is provided to you as an employee or director. Under HMRC’s mobile phone exemption, one phone per employee provided this way is not a taxable benefit — even if you also use it personally.
- The full monthly cost is an allowable expense against corporation tax
- No benefit-in-kind, so nothing to report on a P11D for that phone
- VAT-registered companies can generally reclaim the VAT on the bill
- The handset itself can also be bought or financed through the company — see our guide to buying a phone through your business
The key condition is that the agreement is between the network and the company, not you personally. That is exactly what a business mobile contract is.
2. Personal contract, reimbursed by the company
This is where directors most often go wrong. If the contract is in your own name and the company pays or reimburses the bill, the exemption above does not apply. The reimbursement is generally treated as earnings, and only identifiable business calls escape tax cleanly.
Most modern tariffs are bundled — unlimited calls and texts for one monthly fee. That makes it hard to show any extra business cost at all, so there is often little or nothing to claim. You keep the phone, but you lose most of the tax benefit.
3. Pay personally, claim business calls only
If the company neither provides the phone nor reimburses you, you can still claim the cost of itemised business calls that exceed your bundle. In practice this is fiddly, poorly rewarded and rarely worth the record-keeping. It is the fallback, not the plan.
Why the one-phone exemption makes the company contract a no-brainer
HMRC’s exemption for employer-provided mobile phones is unusually generous. Provided the contract is in the company’s name, the exemption covers the phone, the SIM and the airtime — including private use — for one device per employee. Directors count as employees for this purpose.
Compare the two setups for the same £30/month tariff:
- Company contract: full cost deductible against corporation tax, VAT reclaimable if registered, no benefit-in-kind, no P11D entry for the phone
- Personal contract, company pays: payment treated as earnings, potential PAYE and National Insurance consequences, only business calls relievable
Same phone, same bill — completely different tax outcome. If you are still on a consumer SIM, switching to a business mobile in the company’s name is usually the single highest-value fix.
What your limited company can claim
When the contract and purchase sit with the company, allowable mobile costs typically include:
- Monthly airtime and data — the full tariff cost
- The handset — bought outright, on a handset contract or leased
- Accessories used for work — cases, chargers, car kits
- Repairs and insurance — where the policy is in the company’s name
- Roaming and add-ons — where incurred for business travel
One phone per employee is the exemption limit. A second device provided to the same person for private use can create a taxable benefit, so give the second SIM a clear business purpose or leave it personal.
VAT on mobile phone expenses
A VAT-registered company can generally reclaim the VAT on a business mobile contract. This is another reason the contract must be in the company’s name: consumer contracts do not come with VAT invoices, while business tariffs do.
Where there is significant private use on a company contract, your accountant may apportion the VAT reclaim. Many businesses adopt a simple policy that private use is incidental — but this is exactly the kind of judgement to confirm with your accountant rather than guess.
Common director mistakes
- Leaving the contract in your own name after incorporating — the company paying it does not fix the tax treatment; move the contract
- Adding family SIMs to the company account — SIMs for people who are not employees are a taxable benefit or disallowable cost
- Claiming a round percentage of a personal bill with no evidence — HMRC expects the exemption route or itemised business use, not a guess
- Forgetting the handset — the device is claimable too when bought through the company, not just the airtime
A worked example (illustrative)
A director takes a business SIM at £25/month plus a £600 handset through the company. Over a two-year contract that is £1,200 of airtime and £600 of hardware — £1,800 of allowable spend. With corporation tax relief at 19–25% (depending on the company’s profits, 2026/27 rates) and VAT reclaimed where registered, the true net cost can fall by several hundred pounds compared with paying the same bills personally out of taxed income. Your accountant can put exact numbers on your situation.
Moving an existing personal contract into the company
Already got a number your clients know? You don’t have to lose it. The usual route is:
- Open a business account with a provider in the company’s exact registered name
- Port your number in — for mobile numbers you request a PAC code from your current network and give it to the new provider; the number transfers, typically within one working day
- Close the personal contract once the port completes, and stop any company reimbursements of the old bill
- Date the change — the clean tax treatment starts when the company contract starts, not retrospectively
From that point the phone sits properly inside the company: company expense, exempt benefit, VAT invoice each month.
Record-keeping: what to hold on to
The company-contract route needs very little admin, but keep the basics tidy:
- The contract showing the company as the account holder
- Monthly VAT invoices — business tariffs provide these automatically
- A note of who each line is issued to — this evidences the one-phone-per-employee exemption if you run several lines
- Payment from the business account — avoid paying company bills from personal cards, even if you later reclaim
If HMRC ever asks, that small bundle answers every question in five minutes.
Sole trader instead of a company?
The rules above are specific to limited companies. If you are self-employed without a company, the mechanics are different — there is no benefit-in-kind, and you claim the business proportion of your costs instead. See our companion guide to sole trader mobile phone expenses. And if you provide phones to a wider team, our guide to company mobile phones for employees covers the employer side.
Getting the setup right from day one
Everything above flows from one decision: put the contract in the company’s name. Business tariffs start from around £6/month for SIM-only (2026 pricing), come with VAT invoices, and can include handsets with no upfront cost. We compare every UK network and set the account up in your company name, so the tax treatment is right from the first bill.
Get a quote: Business Mobiles or Hosted VoIP
Frequently Asked Questions
Yes. If the contract is in the company’s name, the company can pay the full bill, claim it against corporation tax and provide the phone to you tax-free under HMRC’s one-phone-per-employee exemption. Personal use is included in the exemption.
Not if it is set up correctly. One mobile phone per employee, on a contract in the company’s name, is an exempt benefit — nothing goes on a P11D for it. A second phone for the same person, or a phone on a personal contract paid by the company, can be taxable.
Only to a limited extent. If the contract is in your own name, the company can reimburse identifiable business calls, but reimbursing the whole bill is generally treated as earnings. Moving to a contract in the company’s name avoids the problem entirely.
Generally yes, if the company is VAT-registered and the contract is a business tariff with proper VAT invoices. Significant private use may need apportioning — confirm the right approach with your accountant.
Yes. Handsets bought or financed by the company are allowable business expenditure, and VAT can normally be reclaimed by VAT-registered companies. Many business tariffs include the handset with no upfront cost, which spreads the expense across the contract.
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