Is mobile phone
tax deductible?

Partly. The business share of your mobile phone bills is allowable, and GOV.UK's own example is a £200 annual bill with £70 of business calls, of which you claim £70 (GOV.UK). A phone used only for the business is allowable in full, and the handset itself is equipment.

A phone is essential to almost every sole trader, and nearly always shared with personal life. GOV.UK uses it as its own example of apportioning a cost: claim the business calls, leave the personal ones out. A separate business phone makes the claim simple and complete.

Is mobile phone tax deductible?

The HMRC rule

Items used for less than 2 years, such as stationery, postage, printer ink and phone and internet bills, are allowable expenses. The rule comes from Office, property and equipment, Expenses if you’re self-employed, Work out your rental income when you let property.

GOV.UK's example is exact: your mobile phone bills for the year total £200, of which £130 is personal calls and £70 business calls, so you can claim £70 (expenses overview). Phone and mobile bills are allowable office costs, and non-business use is not (office, property and equipment). For landlords, GOV.UK allows the cost of calls relating to the property business but not private calls (landlords).

When you can claim it

• The business share of calls, texts and data on a phone also used privately.
• All of the contract for a phone used only for the business.
• The handset, as equipment, for the business share.
• Business calls from a landline or VoIP service.

When you cannot

• Personal calls and the private share of line rental or data.
• Phones for family members who do not work in the business.
• Premium entertainment services charged to the bill.
• Insurance and upgrades for a phone used only privately.

What to claim instead

If you use one phone for everything, a sample month of itemised bills, marking business calls and data, gives a percentage to apply to the year. A second SIM or a dual-SIM handset with a business number makes business use obvious and allowable in full. Many sole traders find a separate number worth it for the records alone.

How to decide if you can claim it

1. Was it for the business? A cost is only allowable if you incur it wholly and exclusively for the business. If it also serves a personal purpose that cannot be separated, such as clothing that keeps you warm or a meal that keeps you going, HMRC disallows it.
2. Is part of it personal? Where a cost has a business part you can identify, such as the business calls on a phone bill or the business miles in a car, you claim that part and leave the rest out, on a reasonable basis you can explain.
3. Is it a running cost or something you keep? It is a running cost, so on the cash basis it counts when you pay it and on traditional accounting when you incur it. Nothing about it needs spreading over later years.
4. Is there a specific rule? For mobile phone, the deciding rule is stationery, phone, postage and printing: items used for less than 2 years, such as stationery, postage, printer ink and phone and internet bills, are allowable expenses.

Worked example: a plumber’s phone

A plumber pays £38 a month, £456 a year, for a contract that includes a £700 handset over 24 months. From two sample months of itemised bills he estimates 60% business use. He claims 60% of the airtime charges each year, and treats the handset part as equipment: on the cash basis, 60% of its cost as it is paid. He records the method with his accounts.

Handset and airtime in one contract

A contract that includes the handset is part equipment, part service. The airtime is a running cost; the handset is something you keep. On the cash basis both are expenses as you pay them, so the split matters little in practice. On traditional accounting, strictly the handset is capital, relieved through capital allowances, usually the Annual Investment Allowance. Where the contract does not split the price, use the retailer's price for a SIM-only plan to estimate the airtime part.

Working out business use

Itemised bills are the best evidence. Take a representative month or two, mark business calls and estimate business data, and apply the percentage to the year. If most of your contact with customers is by phone, the business share may be high; if the phone is mainly personal with occasional business calls, low. Keep the sample bills and the calculation.

Phones for employees

If you employ staff and provide them with a phone, the cost is a staff cost and allowable. Providing one mobile phone to an employee is generally exempt from benefit-in-kind tax for them, even if they also use it privately. That exemption is for employees, not for you as the business owner, whose own phone follows the business share rule.

Where it goes

Phone costs go in phone, fax, stationery and other office costs, box 23 on the full self-employment pages, and the matching category in Making Tax Digital updates. The handset, on traditional accounting, goes through capital allowances instead. If your accounts include the full bill, add back the private share in box 38.

If you are a landlord

Landlords can deduct the cost of calls relating to the property rental business, but not private calls (GOV.UK). A few calls a month to tenants and contractors may be worth only a small amount; a landlord running several properties may justify a separate number.

Where it goes on your return and in MTD

On the self-employment pages of your return, the claimable part of mobile phone belongs in phone, stationery and other office costs (SA103F box 23). The same category is used in Making Tax Digital quarterly updates, so recording it in the right place once keeps both returns consistent.

For a landlord, it belongs in other allowable property expenses (SA105 box 29 on the UK property pages), and in the matching category of a Making Tax Digital property update.

If your turnover was under £90,000, you can use the short self-employment pages (SA103S), which ask for a single figure for total allowable expenses rather than a box-by-box breakdown, and the full pages let you give just a total in box 31 too. The category still matters for your own records and for Making Tax Digital, where each quarterly update uses the same categories unless you choose to send one consolidated figure.

The accounting basis changes when a cost counts. On the cash basis, the default for sole traders since 2024/25, it counts when you pay it; on traditional accounting, when you incur it, with things you keep claimed through capital allowances.

How much an allowable cost saves

An allowable expense does not come back to you in full: it reduces your profit, so it saves tax at your marginal rate. For a sole trader in England, Wales or Northern Ireland that is 26p in the pound at the basic rate (20% Income Tax plus 6% Class 4 National Insurance) and 42p at the higher rate. The sole trader tax calculator works out the figure for your own profit.

What £1,000 of allowable expense saves a sole trader in 2026/27

• Basic rate (20% + 6%)£260
• Higher rate (40% + 2%)£420
• Additional rate (45% + 2%)£470
• Allowance taper band (60% + 2%)£620

Records to keep

Keep the bills, invoices or receipts, and for anything shared with personal use, a note of how you worked out the business share, such as a sample month of itemised calls or an estimate of business hours online. Recheck the percentage if your pattern of work changes.

If Making Tax Digital for Income Tax applies to you (qualifying income over £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028), the records must be digital, and each quarter's costs go into a quarterly update. Check your date with the MTD requirement checker.

Common mistakes

• Claiming the whole bill for a phone also used privately.
• Having no evidence for the business percentage.
• Claiming family members’ phones on the business.

Related expenses

This item sits in the phone, stationery and other office costs category, alongside broadband and internet, laptops and computers, software and subscriptions, stationery and postage and streaming subscriptions. The A to Z of expenses answers the same question for every other cost.

If you record your costs in TapTax, each one lands in the HMRC category it belongs to, with its receipt attached, so your quarterly updates and year-end return use the same figures.