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HMRC announces its new position on smartphones.

February 2012
HMRC have announced that it has changed its interpretation of the legal definition of “telephone apparatus” to include mobile phones and smartphones.  As a result, employers will no longer need to record smartphones on P11Ds, nor pay Class 1A NICs (National Insurance Contributions) on the supposed benefits of the smartphones. The brief notes that many employers have already ceased doing so under separate provisions, but those who have done so, and their employees could seek refunds on amounts paid going back to 2007-08.

When the Finance Act 2006 was upgraded to exempt mobile phone use from tax, HMRC did not consider multimedia-equipped smartphones to qualify. Under the department’s new interpretation of s316 of the Income Taxes (Earnings and Pensions) Act 2003 there will be no assessment of a benefit in kind if the employer provides a single device whose sole purpose is to allow an employee to perform their job, on the condition that private use is not significant.

Nor will the “primary purpose” test apply to sat nav devices, tablet/laptop computers and devices that use voice over internet protocol (VoIP) to make calls. However, the brief added that its view applies to what is understood as a smart phone at the beginning of 2012 and it cannot be certain about how the definition of “mobile phone” in s316 ITEPA 2003 will apply to new devices in the future.

If you need any help and advice for your business on Payroll, National Insurance or an Outsourced Accountancy Service, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help.

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