An employer’s guide to offering mobile phones via salary sacrifice and flexible benefits schemes

This article is brought to you by Flexphone, sponsors of the flexible benefits channel.

As clarified by The Chancellor in the March 2006 budget, you can provide your employees with the opportunity to make significant savings on their personal mobile phone costs through a tax efficient mobile phone scheme.

What are the savings associated with this benefit?

Through Mobile Salary Saver your employees can save up to 41% on Vodafone High Street prices by paying for their mobile from their pretax salary. They can choose from the latest phones, accessories, pay monthly and pay as you talk price plans and get all the usual Vodafone High Street benefits. When they save, your organisation saves up to 12.8% in employer’s National Insurance contributions. That’s an annual saving of £51k for every 1,000 participants in the scheme. An employee with a typical pay monthly package can save between £138 and £172 per year.

What constitutes a mobile phone under the scheme?

The Government guidelines are clear and state that a mobile phone is ‘Anything that may be used to gain access to, or the use of, a public electronic communications service.’ This also includes the SIM card. It excludes BlackBerrys and the latest PDAs which are not offered as part of the scheme.

What happens if some or all of my employees already have a business phone?

As long as the company’s mobile phone policy makes it clear that corporate mobiles are only given to staff who need them to perform their roles, and hence their significant use is for business purposes, a fleet user can also have a mobile phone under the Mobile Salary Saver scheme and comply with HMRC’s guidance.

Will mobile phones go the same way as HCI?

Mobile Salary Saver is set up to ensure that HMRC rules are not abused and that the scheme is only offered for use by the employee, not their family. It also includes devices that are primarily mobile phones and the scheme design has been approved by HMRC.

Why Flexphone

  • The UK’s premier mobile phone benefit provider, delivering tax efficient mobile phones for nearly 3 years
  • Vodafone’s exclusive partner, your employees make savings on High Street prices
  • Your employees can choose from both pay monthly and pay as you talk price plans
  • All marketing, administration, order processing and fulfilment handled at no cost to you

What constitutes a mobile phone?

  • Anything that may be used to gain access to, or the use of, a public electronic communications service.
  • A phone not connected to a landline
  • The primary function is a mobile phone, even if it includes an electronic diary

*The Mobile Salary Saver scheme only includes mobile phones

What does not constitute a mobile phone?

The latest PDAs and BlackBerrys now have additional functions more typically associated with a computer and are not considered primarily as a mobile phone. 2

  • Latest Personal Digital Assistant (PDA)
  • BlackBerry Mobile Salary Saver, the UK’s premier mobile phone benefit. Include Mobile Salary Saver in your benefits package.

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1 ‘Particular benefits: mobile telephones: exemption for 2006/2007 onwards: details’ HMRC manual
2 ‘Particular benefits: computers’ HMRC manual

The views and opinions in this article are those of our sponsor, Flexphone, and do not necessarily reflect those of