Understanding the tax rules for PR agency communications
For PR agency owners, phones and internet are not just utilities—they are the lifeblood of your business. Client calls, media outreach, social media management, and digital campaigns all rely on these services. The good news is that HMRC recognises this and allows you to claim tax relief on the business use of these expenses. However, the rules are specific, and incorrect claims can lead to penalties. So, what can PR agency owners claim for phone and internet exactly? The answer depends on the structure of your contracts and the proportion of business use.
Claiming these expenses correctly can significantly reduce your corporation tax bill or your personal tax liability if you're a sole trader. With the 2024/25 corporation tax rate at 25% for profits over £250,000 and 19% for profits under £50,000, every pound of legitimate expense claimed saves you real money. This guide will break down exactly what you can claim, how to calculate it, and how modern tax planning software simplifies the entire process, ensuring you stay compliant while optimising your tax position.
Claiming for mobile phones and landlines
When it comes to phones, the rules differ based on the contract type. If the business pays for an employee's (including a director's) phone bill, and the contract is in the company's name, the full cost is typically an allowable expense. There is no benefit-in-kind charge for one mobile phone provided to an employee for private use, making it a very tax-efficient perk.
For sole traders or partners, the situation is different. You can only claim for the business use of your personal phone. This requires you to identify the proportion of calls that are for business purposes. A detailed itemised bill is your best friend here. For example, if your total quarterly phone bill is £120 and you can demonstrate that 70% of the calls are business-related, you can claim £84 as a business expense. Using a dedicated tax calculator can help you model these scenarios accurately and instantly see the tax saving.
- Company-owned phones: The full cost of the contract is an allowable business expense.
- Personal phones with business use: You can claim a reasonable proportion based on usage. Keeping a log for a typical month is sufficient evidence for HMRC.
- Handset cost: If the business buys a handset, it can be claimed as a capital allowance or through the Annual Investment Allowance (AIA).
This is a key area where knowing what PR agency owners can claim for phone and internet can directly impact your bottom line.
Navigating broadband and internet expenses
Internet access is equally critical. If you have a broadband contract solely for business premises, the entire cost is claimable. The complexity arises for home-based businesses, which is common for PR agencies, especially startups and freelancers.
If you use your home broadband for business, you can only claim for the business portion. HMRC accepts two main methods for this. The first is an apportionment based on usage. You could track the time spent online for business versus personal activities. The second, and often simpler, method is to use HMRC's simplified expenses flat rates if you work from home for more than 25 hours a month. However, these flat rates do not specifically cover internet costs, so a usage-based claim is usually more accurate for a PR agency heavily reliant on online activity.
For a PR agency owner working from a home office 40 hours a week, a fair claim might be to apportion the broadband cost based on the number of rooms used for business and the time used. For instance, if your broadband costs £40 per month and you use one room in a five-room house exclusively for business for 40% of the time, you could claim £3.20 per month (£40 / 5 rooms * 40% usage). This meticulous tracking is where a tax planning platform proves invaluable, automating the calculations and storing the evidence.
The importance of accurate record-keeping
When HMRC enquires into a tax return, they will ask for evidence to support your claims. For phone and internet expenses, this means having itemised bills, usage logs, or a robust method for your apportionment. The question of what can PR agency owners claim for phone and internet is ultimately answered by the quality of your records.
You should keep records for at least 5 years after the 31 January submission deadline of the relevant tax year. Good practice includes:
- Marking business calls on your itemised phone bills.
- Keeping a diary of business internet usage for a representative period.
- Retaining all contracts and invoices in the company name.
Manually maintaining these records is time-consuming. This is a core problem that modern tax planning software solves. By using a platform like TaxPlan, you can log expenses as they occur, categorise them, and automatically calculate the business proportion, with all supporting documents stored securely in one place. This not only saves time but also creates a bulletproof audit trail for HMRC compliance.
Using technology to simplify your claims
Figuring out what can PR agency owners claim for phone and internet is a perfect example of a task that benefits from automation. Instead of spending hours with spreadsheets and paper bills, you can use a dedicated tax planning platform to manage the process.
These platforms offer features like real-time tax calculations, which instantly show you the tax impact of your expense claims. You can run "what-if" scenarios to see how different apportionment methods affect your tax bill. For instance, you can model the tax saving from claiming 60% versus 70% business use of your internet to find the most accurate and defensible figure.
By centralising your financial data, a platform provides a clear overview of all your deductible expenses, turning the complex question of what can PR agency owners claim for phone and internet into a simple, automated part of your monthly routine. This proactive approach to tax planning ensures you never miss a deduction and always have your records ready for inspection. Explore how our features can help you achieve this.
Actionable steps to maximise your claims
To ensure you are claiming everything you are entitled to, follow this simple checklist. First, review all your current phone and internet contracts. Identify which are in the company name and which are personal. For personal contracts used for business, analyse a recent bill to establish a reliable business use percentage.
Next, implement a system for ongoing tracking. This could be as simple as a dedicated notebook or, more efficiently, a digital tool within your accounting or tax planning software. Consistently apply your calculated business percentage to each bill. Finally, ensure these figures are accurately reported on your company's corporation tax return (CT600) or your self-assessment tax return if you're a sole trader.
Understanding what can PR agency owners claim for phone and internet is a fundamental part of smart financial management. By getting it right, you keep more of your hard-earned profits within the business, funding growth and investment. If you're ready to streamline this process, sign up to discover how technology can handle the complexity for you.
