Whether you can claim tax relief on your mobile phone or landline expenses depends on how your business is structured, who the phone contract is with and how the phone is used. 

Limited Companies and Sole Traders are treated differently, so it’s important to understand which rules apply to you.

Business phone expenses: Sole Traders vs Limited Company

Here’s a quick comparison of what you may be able to claim:

Business phones for limited companies

If you run your business as a limited company, you’re able to claim the cost of a phone and a landline provided it’s in the business name and used for business purposes.

If your landline phone contract is only for business use, this is an allowable company expense and you won’t be taxed personally. By having a separate phone line for ‘only business’, it shows this is 100% for business.

For mobile phones, provided the contract is between the company and the mobile phone provider, the company can claim all costs as an allowable expense.

If your company pays your entire personal phone bill, you’ll have to pay a ‘benefit in kind’ (BIK) charge on the total amount of the bill, and your company will pay National Insurance Contributions at 15% in the 2025/26 and 2026/27 tax year on the same amount (minus the cost of any business calls you can identify).

If you make a claim for business only calls made on your personal mobile or landline phone bill, this is an allowable expense provided you can prove it was a business call. You can also reclaim the VAT element of the business calls (if you‘re VAT registered), but you won’t be able to reclaim any part of the line rental, as you would incur this cost anyway.

The one setback with signing a contract in the name of your limited company is that you’ll probably have to use one of your phone provider’s business tariffs, which may be more expensive – but any increase in cost will probably be covered by tax savings.

The same principles apply to a landline phone. You will need to set up a contract with your chosen provider in the name of your limited company to include such expenses in your accounts and claim tax relief.

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If your limited company is an employer providing mobile phones to its employees, you have certain tax, National Insurance and reporting obligations. This includes:

• costs for phones you provide to employees
• reimbursing your employees’ own phone costs.

However, you don’t have to report anything to HM Revenue and Customs (HMRC) or deduct and pay tax and National Insurance if both of the following apply:

• You provide an employee with only one mobile phone or SIM card
• The phone contract is between your limited company and the phone provider.
  

If you take out a mobile phone contract in the name of your limited company, you’ll receive Corporation Tax relief on the entire cost of your phone bill. 

The current rate of Corporation Tax for the 2026/27 tax year is 19-25% (same for 2025/26).

Business phones for sole traders

If you’re a self-employed sole trader, the situation is slightly different as there is no legal separation between you and your business. HMRC does allow you to claim for the business proportion of your phone use, though it may be hard to separate this from personal use.

If you’re using a home or mobile phone line for both business and personal calls, you can claim the business proportion of the costs. This should be calculated using a reasonable method that reflects your actual business use. 

For example, HMRC says a proportion of telephone line rental can be claimed based on the ratio of business use to total use. When working out this proportion, you should consider all aspects of use, including incoming and outgoing calls. 

You should only claim the business element of your costs. If you have a phone package that includes calls and data, it may be difficult to work out an appropriate business proportion. This is where an accountant like Crunch could help.

Alternatively, you could set up a separate phone line or mobile contract in the business name which is used 100% for business. The same approach is taken when determining the allowable expenses associated with broadband.  

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Can I claim for business use on a personal phone contract?

We don’t recommend claiming for business use on a personal mobile phone contract. Most mobile phone tariffs provide ‘bundles’ of calls and data usage. It’s very difficult to evidence to HMRC how the business and personal parts of your usage are split.  

However, if you’re a Sole Trader, HMRC allows you to claim the business proportion of phone costs where this can be reasonably identified. It’s important to use a reasonable method for calculating your business use and keep records to support your claims.

Example of claiming business phone expenses

To help you make sense of how you personally could claim expenses for business telephone calls, we’ve put together some handy examples.

Example 1: Limited Company with a company mobile phone

Sarah runs a Limited Company and takes out a mobile phone contract in the company's name. The company provides her with one mobile phone, which she uses for business and occasionally for personal calls.

As the contract is between the company and the phone provider, the company can generally pay for the phone and associated costs. HMRC provides an exemption for one employer-provided mobile phone available to an employee or director, which can include private use.

Example 2: Sole Trader using one phone for business and personal use

James is a self-employed consultant. He uses the same mobile phone to speak to clients and suppliers as he does to contact friends and family. James cannot claim the personal element of his phone costs. However, he may be able to claim a reasonable proportion relating to his business use, provided he can support how that proportion has been calculated.

Example 3: Sole Trader with a separate business phone

Amir is a sole trader who takes out a second mobile phone contract specifically for his business. He uses the phone exclusively to speak to customers and suppliers. As the phone is used wholly for business, the associated costs are generally easier to identify as business expenses.

Example 4: Limited Company director using a personal phone

Lucy is a director of a limited company but has a mobile phone contract in her own name. She occasionally uses her personal phone to make business calls. The company should not simply pay her entire personal phone bill. The actual cost of identifiable business calls may be treated differently from the monthly tariff or line rental, so the arrangement and reimbursement should be considered carefully.

Need more advice on expenses?

We have articles on sole trader expenses and limited company business expenses. Business expenses are a great way to reduce the tax you pay, and no-one wants to pay more tax than they need to!