Self Employed Mobile Phone Expenses – What You Can Claim

If you’re running your own business, your mobile phone is probably one of your go-to tools. Whether you’re calling clients, reaching out to suppliers, or managing emails on the fly, it’s a crucial part of your daily routine. What many self-employed individuals don’t realise is that self employed mobile phone expenses can be claimed as a business cost, helping to cut down your tax bill.

HMRC lets you deduct mobile phone costs that are directly related to your business. This means you can lower your taxable profit by subtracting the part of your phone bill that’s for work use. Over time, this can really add up to some significant tax savings.

That said, the rules depend on whether you use your phone solely for business or for both work and personal use. If it’s strictly for work, you can typically claim the entire cost. But if you’re using it for both, you can only claim the percentage that’s related to your business activities. It is essential to understand this difference to stay compliant as well as to make the most out of your allowable self employed expenses.

When you're self-employed, HMRC allows you to deduct mobile phone expenses from your business income, but there's a catch: those expenses need to be work-related. This includes costs for making business calls, sending texts for work, or using data for your business activities.

HMRC typically categorises these expenses into two main types: capital expenses and revenue expenses.

Capital expenses are those one-time costs for items you'll use over a longer period. For instance, if you buy a new phone for your business, that's considered a capital expense. Generally, you can claim capital allowances on these kinds of purchases.

On the other hand, revenue expenses are the everyday costs of running your business. This includes your monthly mobile phone bill, topping up a pay-as-you-go plan, or paying for extra data. These expenses are usually fully deductible for the portion used for business.

Here are some examples of allowable mobile phone expenses for the self-employed in the UK:

• Monthly phone contract costs (business-use percentage).
• Pay-as-you-go top-ups used for work calls or data.
• Work-related calls, texts, and data usage.
• The cost of the handset if bought for business purposes.
• Repairs to your work phone.
• Accessories such as a charger, case, or hands-free kit used for business.

HMRC Rules for Claiming Mobile Phone Expenses

When it comes to expenses for self-employed mobile phone use, HMRC pays close attention to how you use your mobile phone. If you use your mobile solely for business, you can typically claim the entire cost. However, if you’re using the same phone for both work and personal matters, you’ll need to divide the costs and only claim the portion that’s for business use.

This division is crucial because HMRC doesn’t allow you to claim personal expenses as business costs. For example, if 60% of your calls, texts, and data are work-related, you can only claim 60% of your phone bill. The same rule applies to other expenses like accessories or repairs, you can only include the part that’s related to your business.

HMRC considers mobile phones as “mixed-use” items when they’re used for both business and personal purposes. In this situation, you should be prepared to demonstrate how you worked out the split between personal and work use. This might mean looking over a typical month’s bill and calculating the percentage of calls or data that were for business.

If HMRC ever requests proof, they may want to see:

• Copies of phone bills with highlighted business calls.
• A log or record of work-related usage.
• Receipts for purchases such as the handset or accessories.

Claiming Company Mobile Phone Expenses on Company Contract

According to HMRC, a company can provide staff with one mobile phone for business use.

As such, you're not required to report to HMRC or make tax or National Insurance deductions if you're using one mobile phone or SIM card, and the phone contract is between your limited company and the phone supplier.

If using more than one mobile phone, one of the phones will be tax-free, but the remaining mobile phones will be considered a benefit in kind and taxed accordingly. 

Both conditions need to be met for the exemption to be valid.

Keep in mind that the contract must be made in your company's name, and not in your name as the contractor. The exemption isn't valid if you're only just adding your company name and address to the monthly invoice.  

What to Claim Under Mobile Phone Expenses? 

• Expenses relating to the purchase of the mobile phone: This includes the cost of the mobile phone, contract and call costs. 
• Additional call costs: This can be charged if you obtain an itemised bill. If you've used up your inclusive minutes and the additional call costs incurred are for both business and personal calls, the costs for your business calls can be claimed as an expense.
• Pay As You Go (PAYG) mobile: These are considered marginal costs and can be claimed as an expense.
• VAT: If you're VAT registered, you may claim the VAT portion related to your mobile phone expenses.

Claiming Mobile Phone Expenses on Personal Contract

If your mobile phone purchase and the contract are made in your name, you won't be able to claim the cost of the mobile phone or the monthly tariff.

This also applies if you've purchased a PAYG mobile.

The following will apply: 

• The costs incurred for business calls made using your personal mobile can be claimed as an expense. This can be charged if you receive an itemised bill. You're also able to reclaim the VAT element of the business calls. 
• If your personal phone bills are paid for by your company, you're required to pay a benefit in kind charge on the total bill. Your company will also pay Class 1 National Insurance Contributions on the total bill (after the costs incurred for business calls have been deducted). 

Yes, you can claim mobile phone expenses if you use your mobile phone for both business and personal purposes. However, you can only claim the portion of the expenses that directly relates to your business use.

How to Work Out Your Business Usage Percentage

To claim the right amount for your cell phone business expenses and stay within HMRC’s rules., you need to work out percentage of mobile usage for business purpose.

Here’s a simple step-by-step way to calculate it:

Step 1: Monitor your calls and data usage

Review your recent phone activity to see which calls, texts, and data sessions were work-related. This might include chatting with clients, suppliers, or colleagues, as well as using apps or emails for business tasks.

Step 2: Use your phone bills to figure out the business proportion

Most service providers give you detailed monthly bills that show call duration, numbers dialed, and data consumed. Go through these bills and highlight the ones that pertain to your business. Sum up the total for business use and compare it to your overall usage.

Step 3: Maintain a log for at least one typical month

Select a month that accurately represents your usual phone usage. Record every work-related call, text, and data activity during that time. This will help you determine a realistic percentage to apply to your bills throughout the year.

Example calculation:

If your monthly bill is £40 and you discover that 70% of your calls and data are for business, you can claim 70% of the bill: £40 × 70% = £28.

Keeping records is essential when you're claiming mobile phone expenses as a self-employed individual. HMRC wants you to have clear evidence that links your phone costs to your business activities. This helps prove your claim if they ever ask questions.

What records to keep
You should keep:

• Monthly phone bills or top-up receipts.
• Proof of purchase for the handset, accessories, or repairs.
• A log showing your business calls, texts, and data usage.
• Any calculations used to work out your business-use percentage.

How long to keep them

HMRC recommends that you keep your records for at least five years after the 31 January submission deadline for the relevant tax year. For instance, if you submit your 2024/25 tax return by 31 January 2026, you should keep those records until at least 31 January 2031.

Best practices for tracking business mobile usage

• Highlight business calls and data use on your bills each month.
• Keep a dedicated spreadsheet to record your work-related usage.
• Use one month’s detailed log to calculate your average business use for the year.
• Store all receipts and bills digitally so they are easy to find.

If you are self-employed, you can claim mobile phone expenses through your Self Assessment tax return.  The important thing is to record only the business-use portion unless you have a phone that is used solely for work.

Which section of the Self Assessment tax return to use

When you fill in your Self Assessment, you need to report your business expenses in the Self-employment (SA103) section.

• If you use the short form (SA103S), you can include your mobile phone costs under “Other allowable business expenses.”
• If you use the full form (SA103F), list them under “Telephone, fax, stationery and other office costs.”

When to consult an accountant for accuracy

A self employed accountant can be incredibly helpful if:

• You're not quite sure how to separate your personal and business expenses.
• You have several phones or shared contracts.
• You want to claim costs related to your business, like internet bills, in addition to your mobile expenses.

They can review your records, assist you in claiming the right amount, and minimise the chances of HMRC questioning your figures. Often, the tax savings they help you secure can easily cover their fees.

Claiming mobile phone expenses is a simple yet effective way to lower your tax bill if you're self-employed. By accurately reporting the business-use portion in your Self Assessment, you can keep more of your hard-earned money while staying compliant with HMRC.

The key is to maintain precise records of your calls, texts, and data usage for work. By tracking your usage throughout the year, you’ll find it much easier to calculate the right claim amount.

While you can handle this on your own, getting the professional help of an accountant for self-employed can really maximise your claim. They can review your numbers, point out other deductible expenses you might have overlooked, and give you the reassurance that your tax return is accurate.

If you're looking to make the most out of your mobile phone expense claim and save on taxes, book a free consultation with our expert self-employed accountant today. They can help you claim every pound you are entitled to, without the stress of doing it all alone.

FAQs on Sole Trader Mobile Phone Expenses

Can I claim 100% of my mobile bill if I’m self employed?

You can claim 100% of your mobile bill only if you use the phone solely for business, with no personal use at all.

What if I use my personal phone for work?

If you use your personal phone for work, you can claim the business-use percentage of your costs based on calls, texts, and data used for work.

What if my business covers my employee’s phone bills?

If your business pays your employee’s phone bills for work use, you can claim these as a business expense, but they may be treated as a benefit in kind for the employee.

Do I need to submit my phone bills to HMRC?

You don’t need to send your phone bills when filing your tax return, but you must keep them as proof in case HMRC asks to see them later.

What if my contract is in my personal name?

You can still claim the business-use portion of the costs, even if the contract is in your personal name, as long as the usage relates to your work.

Can businesses reclaim the cost of work mobile phones for employees?

Yes, a business can claim the cost of one work phone per employee as a tax-deductible expense, but the contract must be in the business’s name and paid from the business bank account.