Vodafone, which provides mobile phones to employers for staff as a tax-efficient benefit, is to withdraw its mobile phone product Flexphone from the market by the end of the current tax year.
The scheme allowed employees to buy a mobile phone from their gross salary, in doing so saving on national insurance contributions (NICs), while employers save on NICs. The scheme will be phased out during the course of the current tax year, with existing contracts being honoured until they come to an end.
A spokesman from Vodafone said: "As part of an ongoing review of its product portfolio, Vodafone has taken the decision to retire its mobile salary saver product. Customers currently signed up to the service will be able to take advantage of other Vodafone offers as a replacement.
In its place, Vodafone plans to introduce an employee discount scheme.
Staff currently employed by Vodafone on the mobile salary saver product will be offered alternative employment opportunities within Vodafone UK.
Employers that currently offer the tax-efficient mobile phone scheme to staff include Royal Bank of Scotland, HBOS, Cancer Research UK and Kent County Council. Jane Vivier, reward advisor at Kent County Council, said:"This is a real shock and a real shame. We had an excellent service from Flexphone and we will be looking at alternatives because it has been a valued benefit by a large proportion of our staff."