By PaySlipCheck Editorial
· Reviewed by PaySlipCheck Editorial Standards Team
· 14 June 2026
· 5 min read
The UK statutory exemption allows one company mobile phone per employee — provided by employer for business + personal use — to be tax-exempt. This is one of the most generous BiK exemptions available. If you have TWO employer-provided phones, only the first is exempt; the second becomes fully taxable as a BiK. Line rental is included in the exemption. Extra usage on top of the plan (e.g., international roaming above the plan) can be treated separately if paid directly by employer.
Verified against 4 official sources · Last reviewed 14 June 2026
The exemption covers ONE mobile phone per employee. Includes:
- Handset cost
- Monthly plan cost (calls, texts, data)
- Line rental
- Personal + business usage together
Does NOT cover:
- A second phone (fully taxable)
- Cash phone allowance (taxable as cash income)
- SIM-only reimbursement (may be treated differently)
What if I get a phone allowance instead?
If your employer pays £50/month cash phone allowance:
- Treated as taxable income
- £600/year cash → £240/year tax at higher rate
- You buy your own phone + plan
What about my personal SIM being paid by employer?
If employer pays for a SIM-only plan for a phone you own:
- Business-use portion tax-exempt
- Personal-use portion should be a BiK — but often not enforced strictly
- Common practice varies; check with HR
In short
One company phone per employee = full tax exemption. Cash allowance is taxable. Best value: negotiate a company phone rather than a phone allowance.
Frequently asked questions
Is my company phone taxable?
One phone per employee is tax-exempt. A second phone is fully taxable BiK.
What if I use it 100% for personal?
Still tax-exempt — the exemption covers combined personal + business use.
Is line rental exempt too?
Yes — the exemption covers the full monthly plan cost.
What about a phone allowance?
Cash allowance is fully taxable. Company-provided phone is tax-exempt.
Do smart watches count?
Depends on primary function. Watches with cellular functionality are generally treated as second phones (taxable).
What is a P11D — The UK P11D form is submitted annually by employers to HMRC reporting all Benefits in Kind provided to employees. You get a copy showing your total BiK for the tax year. HMRC uses this to adjust your tax code and collect BiK tax.
More on related topics
Childcare vouchers — UK childcare vouchers closed to new joiners in October 2018 — existing users can continue. Tax-Free Childcare replaced it (£2,000/child/year government top-up). This guide covers both + which is better for your situation.
Company car tax — UK company car BiK tax is calculated as list price × emission-band % × your marginal Income Tax rate. Electric cars sit at 3% BiK for 2026/27 (rising 1% per year), making them exceptionally tax-efficient. This guide covers the maths + when a company car beats a car allowance.
Company car vs allowance — UK company car is better than cash car allowance for electric vehicles (3% BiK) at higher-rate tax. Cash allowance is better for petrol/diesel cars at higher-rate. This guide covers the specific numbers.
All tax figures on this page use the same configuration that powers our
calculators — see our
editorial standards for the review process.
Last reviewed: 14 June 2026.
Next review due 14 December 2026.
Disclaimer: This page provides general information based on published HMRC and gov.scot figures. It is not personal tax or financial advice. For your specific situation, please consult a qualified accountant or contact HMRC directly.