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Smartphone users could be in for tax refund

Fri 24 Feb, 2012 // Firstnumber Team
Employees can claim tax refunds on smartphones

As of this week, smartphones previously provided to employees as a ‘benefit in kind’ will fall under the general ‘mobile phones’ category and will no longer be taxed.

Work mobile phones have been exempt from tax since 2006/2007 when they were classed as a business necessity rather than a luxury. Smartphones, however, were seen in a different light. Their primary purpose was defined as being more than just placing and receiving calls.

“Where apparatus is clearly designed or adapted for the primary purpose of transmitting and receiving spoken messages and is used in connection with a public communications service, the fact that it can also be used for other functions will not prevent it from falling within the meaning of ‘mobile phone’,” states the new definition coined by HM Revenue & Customs.

The decision to update their stance comes at a time when phone industry regulator Ofcom has released estimates that up to 47 per cent of UK teenagers and a quarter of adults are smartphone owners.

The new rules apply to any smartphones purchased in the last four years so employees could be in for tax returns of up to £200 or even £300 with the charge calculated using a 20 per cent annual value of the phone’s cost since the start of that period. Anyone hoping to claim a refund from the 2007/2008 tax year has until the 5th April, 2012 to do so.

iPads, other tablets and netbooks remain exempt from the new rule as they are primarily designed to serve a different purpose to making calls. It is unlikely that HMRC will adapt its definitions to include devices operating only Voice Over Internet Protocol (VOIP) systems as a means of transmitting spoken messages.

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