By PaySlipCheck Editorial
· Reviewed by PaySlipCheck Editorial Standards Team
· 14 June 2026
· 5 min read
The UK distinction between a mobile phone allowance and a company phone matters materially for tax. Cash allowance (£30-£60/month typical) is taxable income at your marginal rate — you pay Income Tax + NI on every penny. Employer-provided phone (one per employee) is fully tax-exempt under statutory exemption. If your employer offers both options, always pick the company phone — you're better off by 28-42% depending on tax band.
Verified against 4 official sources · Last reviewed 14 June 2026
Cash phone allowance £50/month:
- £600/year cash income
- Higher-rate tax + NI: £252/year
- Net after tax: £348 to buy phone + plan
Company phone (tax-exempt):
- £600/year value of phone + plan
- No tax
- Net value: £600
The company phone is worth £252 more per year at higher rate.
Why cash allowance is common anyway
Choice of phone/carrier
BYOD flexibility
Simpler HR administration
Some workers already have preferred plan
When cash allowance beats company phone
You want a specific handset (iPhone Pro Max on premium plan) — employer's provided phone may be locked
BYOD policies restrict corporate devices from personal use
Negotiating
If employer offers cash allowance, ask if they'd offer a company phone instead. Employer NI saving (13.8% on cash) can be part of the argument.
In short
UK cash phone allowance is fully taxable. Company phone is fully tax-exempt (one per employee). Company phone is nearly always £250-£500/year better at higher rate.
Frequently asked questions
Is a cash phone allowance taxable?
Yes — fully taxable income at your marginal rate + NI.
Company phone taxable?
No — one company phone per employee is fully tax-exempt.
Should I take cash or company phone?
Company phone at higher rate saves £250-£500/year in tax. Nearly always better.
What if I want to keep my personal number?
Ask employer for dual-SIM company phone — many carrier plans allow it.
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.