The FreeAgent Blog

There is potentially good news for any employers who provide their employees with smartphones.

Up until 20th February, HMRC’s guidance was that a smartphone, such as an iPhone or BlackBerry, didn’t count as a mobile phone for taxable benefit purposes, but as a computer.

Why would that matter?

An employer can provide an employee with one company mobile phone, which can be used for both business and private calls, with no extra tax or National Insurance to pay either by the employer or the employee.

On the other hand, if an employer provides an employee with a company asset, such as a computer, for private use or for mixed business and private use, then the employer has to pay Class 1A National Insurance on the value of that asset, and it’s a taxable benefit for the employee.

Assets provided for business use only, or with an insignificant amount of private use, would be exempted from this.

In other words - it could be more expensive to provide an employee with a company computer than a company mobile phone. And because a smartphone used to be classed as a computer, it could cost more to give employees smartphones than to give them ordinary mobile phones.

Not any more.

HMRC now say that they will treat a smartphone as a mobile phone rather than as a computer.

So if, as an employer, you provide your employees with one mobile phone and it just happens to be an iPhone or a BlackBerry, you no longer have to treat it as a computer and potentially pay Class 1A National Insurance on it.

And HMRC also say that because their initial interpretation was incorrect, a smartphone should always have been treated as a mobile phone - so if you’ve paid any Class 1A National Insurance on a smartphone that’s the only mobile phone you provide to an employee, you can reclaim it.

There are words of caution though!

HMRC have said that what they’re now considering to be a mobile phone is a smartphone using technology that’s current at the beginning of 2012. They’re hedging their bets here to allow for the guidance to be changed if technological advances continue apace.

They’ve also said:

“The definition [of a mobile phone] does not cover apparatus that is designed or adapted for a primary purpose other than transmitting or receiving spoken messages, even if that apparatus is also capable of being used in this way.

Examples of apparatus that does not fall within the definition of a mobile phone include satellite navigation devices, devices that are solely PDAs and tablet and laptop computers. In general, devices that use Voice Over Internet Protocol ('VOIP') systems to make and receive phone calls will not satisfy the primary purpose test.”

In other words, an iPhone is a mobile phone, an iPad isn’t.

This to me says that HMRC are moving with the times and accepting that a large part of the working population have smartphones.

How about tax relief on the use of free services like Skype next?

We’re delighted to announce a new partnership which we hope will help us reach out to new freelancers and small business owners in the UK.

We’ve teamed up with Enterprise Nation - the small business support company that helps people start and grow their own business. By partnering with them, we’ll be bringing FreeAgent to a whole new audience and demonstrating how our system can help manage their accounts more effectively.

We’ve had a great relationship with Enterprise Nation for many years. They profiled our CEO Ed in 2007, not long after FreeAgent was first launched; and our Chief Accountant Emily has regularly written articles and accountancy tips for them over the past few years.

As we’ve been friends for so long, it was a logical step for us to take our relationship further - and we’re chuffed to bits to now be one of their official partners. It means that FreeAgent will now be promoted through the Enterprise Nation online StartUp Kit, and we’ll be doing a host of Q&A sessions with them in the coming months to give useful accountancy tips to small businesses and freelancers. We’re also planning a couple of webchats with them as well, so it should be pretty exciting stuff all round.

If you take a look at the Enterprise Nation website, you’ll find a wealth of information about them and the fantastic advice they provide to small businesses and start-ups. You can also read the recent blog post they’ve written which explains what they think about partnering with FreeAgent. It’s all great stuff and just makes us look forward to working with them more!

FreeAgent is designed to help you take back and keep control of your business finances, and the feedback we get is that our focus on great design, providing capability instead of complexity as well as our fantastic and responsive support is appreciated by many of you.

One area a lot of business owners find time-consuming is keeping on top of their expenses so I'm pleased to draw your attention to a new FreeAgent integration that can really help simplify this process.

ExpenseMagic is a receipt processing and expense management service that lets you use your mobile to keep track of your expense receipts with minimal effort. Just take a photo of the receipt and all the details will then be automatically pushed to your FreeAgent account, having already worked out the correct VAT reclaim rate for you.

Their iphone app also integrates with your calendar so you can easily add a diary record to any expense, to remind you of what a particular expense was for. All your data and images are stored in the cloud and are accessible anywhere and any time, exportable either on-demand or automatically every month.

To celebrate the launch of their FreeAgent integration, and to help you get your expenses up to date, ExpenseMagic are offering all of our users access to their service entirely free of charge up until the end of this tax year, 5th April 2012.

The free offering will have a fair usage policy of 100 receipts per person per month and can be claimed by simply logging into your FreeAgent account via the expense ExpenseMagic app which can be downloaded at www.itunes.com/app/expensemagic. Doing this will automatically credit your ExpenseMagic account to provide your access for free for this period.

We’re very excited to be down in London today for the Making Social a Part of Your DNA conference. It’s an event that FreeAgent is proud to be sponsoring and - as it’s also part of Social Media Week 2012 - we’ve set up a special promotion.

For delegates or attendees at Making Social Part of Your DNA who haven’t given FreeAgent a go yet, we’ll give them a three month trial for free. So as long as you’re in the room, the trial is yours.

In addition, we’ll also be putting all of the names together and picking one lucky winner at random who will win an entire year’s subscription to FreeAgent. Yes, that’s a whole 12 months of using our award-winning accounting system for all of your invoicing, tracking time and expenses, analysing bank statements and building real-time accounts - and it’ll be completely free of charge!

So if you’re attending Making Social Part of Your DNA, simply pick up one of our FreeAgent branded place-mats when you’re at the event, and use the special code printed on them to set up your three month trial with us.

You’ve got a whole week to set up your trial and you’ll automatically be entered in the draw to win the year’s free subscription. We may even throw some jelly beans in as well, if you’re really nice to us.

We’ll also be tweeting during the conference, so please drop us a shout at @FreeAgent or use the hashtag #smwdna. See you there!