HMRC creaks into the 21st century- reclaim your mobile phone tax charge!
Back in 2005, according to HMRC, a mobile phone was such a luxury item that if your employer provided you with one that you could possibly use for non-work purposes, you needed to get whacked with a taxable benefit in kind- essentially increasing the tax you paid on your salary.
However, in 2006/07, it was agreed that actually, mobile phones were more of a necessity than a luxury, and they became exempt, meaning you could get the use of mobile phone from your employer for free.
The thing was, the taxman did not consider smart phones to be mobile phones. This meant that anyone with an iPhone, Blackberry or Android phone has been levied with an income tax charge calculated using a 20% annual value of the phone’s cost since then.
But like a dinosaur forced to accept it’s getting a bit chilly, HMRC have now revised the definition of mobile phone, stating in their guidance that,
“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’.
This means that smartphones will fall within the meaning of ‘mobile phone.’”
Tablets and notebooks, however, which may be able to receive calls via VOIP, are nevertheless still excluded from the definition.
What is very interesting, though, is that HMRC have conceded to allow the change in definition to apply retrospectively, ie all the way back to when the new rules were implemented in 2006. However, you can’t actually amend your tax return for 2006/07 any more owing to revenue time limits, but you still have time to go back as far as your 2007/08 return, if you are one of the ones affected.
If you assume a £400 phone cost, over four years for a higher rate taxpayer, this works out at over £120 tax repayment. Which is better than getting smacked in the belly with a wet fish.
If you are affected and want to make a claim, you need to do so by 5 April 2012 for the 2007/08 tax year, as there is a four year time limit.
You must make your claim in writing and it should include:
the tax year to which it relates
why you think you've paid too much tax
evidence of the tax that's been paid
how you would like to receive any repayment due