My company has had a PAYE inspection and the Taxman said I must pay NICs on the telephone bills we pay for employees. Is this right and how can I avoid this extra expense in the future?
Where the employer pays a bill in the employee’s name, such as the employee’s telephone bill, the amount paid is treated as earnings and class 1 NICs are due. The costs that relate to business calls may be excluded from this value of ‘earnings’, but not the cost of the line rental. If the employer pays for a second line to be installed at the employee’s home to be used exclusively for business calls, class 1 NIC is not due on the cost of those calls or line rental. So to reduce your NIC costs make sure the contract with the telecoms company is with your company as the employer.