For many people a Smart Phone can be the only personal device they use to access the internet. 5.9 million adults in the UK have never used the internet. Offline households are missing out on estimated savings of £560 per year from shopping and paying bills online, ONS 2016.
One of the most popular benefits we offer, this scheme allows employees to get a SIM Free Mobile Phone from leading manufactures such as Apple, Samsung and Google. All of the phones operate on an Unlocked SIM Free basis meaning the employees can choose to keep their existing contract, network and number or shop around for the best SIM only deals.
The way it works is that your business buys the handset and the employee repays the cost over over an agreed period of time through their salary. This repayment peroid can be 6, 12, 18, 24 or 36 months, with most of the schemes we operate choose 12 months. Mobile Phones is a P11D benefit and employees save National Insurance but pay tax on the value of the phone. This means that as well as spreading the cost of the phone over an agreed period of time employees will also benefit from a 12% NI saving if they are basic rate taxpayer (2% if they are higher rate taxpayers).
How is it paid for ?
Your business pays for the handset and recovers the money from the employees salary. If cashflow is a concern when looking at this benefit, My Benefits World can work with your business to set limits on the amount employees are allowed to spend, both on an individual and company wide basis. The idea behind the government granting a tax savings (NI Saving) on the scheme is to broaden online access to services such as internet banking and the ability to pay bills online, thus saving money.
We’ve had several corporates ask us about the impact of April 2017 tax changes on the scheme. Although the headlines in the press stated that employees were saving 32% or 42% off the phone (thus costing the treasury money) these were very misleading as it was only possible to achieve these levels of tax savings if the employee returned the phone at the end of the repayment period – and in our experience no one ever did (why would you?). Therefore, phones / computers remain taxable benefits and the employee still saves NI at 12% or 2%.
Why offer this benefit ?
Whilst employees do appreciate the opportunity to save up to 12% off the cost off a handset, the overwhelming reason they engage in the benefit is the ability to spread the cost of repaying the handset over a period of time with no credit or interest. Employees are very appreciative of this. In addition there are some fantastic SIM only offers and this benefit allows employees to capitalise.
Although the mobile phone benefit will have universal appeal, in our experience the benefit tends to be offered by businesses who are keen to attract and incentivise employees who are new to the workplace, such as graduates and apprentices. It is a way of your business saying that we understand the importance you place on your phone and the access it provides to social media and we are giving you the ability to get a new handset without having to worry about taking on (additional) debt/credit. It could be argued of all the employee benefits you provide Mobile Phones would be the most well used and visible.