Phone and internet expenses for sole traders: HMRC rules and allowances

Most self-employed people rely on the same phone and broadband for both work and personal use.

You can usually claim back part of the cost as a business expense, but only the share that relates to your work.

This guide explains HMRC’s rules, provides worked examples, and includes a simple template to help you track your usage.

What counts as ‘business’ use?

You can only claim the share of your phone and internet costs that is wholly and exclusively for business.

This includes:

• Calls to clients, suppliers, or business contacts
• Data use for business apps, email, or cloud software
• Broadband used for running your website, invoicing, or admin

You can’t claim for personal calls, streaming, or family browsing – even if they’re on the same plan.

If you have a separate business phone or broadband contract, you can usually claim the full cost.

How to apportion costs

Most sole traders share a single line or broadband package for both personal and business use.

If this is what you do, you need to use a fair and reasonable method to split the costs.

The simplest way for most people is by percentage of use. Here’s an example:

There are no fixed HMRC percentages,  but you must be able to justify your method if asked.

Mixed business and personal use – how strict is it in reality?

HMRC’s rule is that you can only claim expenses that are wholly and exclusively for business.

In reality, most phone and broadband bills are mixed use, because you’ll almost always use the same line or data for personal reasons too.

With modern contracts, it’s harder to split things precisely.

Unlimited calls and unlimited data mean there’s no real cost per call or per MB, so the personal element often looks quite small.

HMRC generally isn’t interested in whether you used 53% or 57% for business – what matters is that your claim looks fair and not inflated.

The main risk is at the extremes. If you try to claim 100% of a household broadband package that clearly serves the whole family, or write off the full cost of a top-end smartphone used partly for personal calls, that’s more likely to be challenged.

The safest approach is to apply a reasonable percentage, keep a record of how you worked it out, and avoid rounding everything up to 100% unless you have a separate business-only contract.

Keep records

You don’t need to record every single call or data session, but you should keep enough evidence to show how you worked out the split. That might include:

• An itemised bill highlighting business calls
• A note of typical weekly business use versus personal use
• A log of time spent online for business versus personal use

An example (for 12 months)

If you’re self-employed, here’s a typical example of your phone and internet costs:

• Mobile phone bill: £40 per month
• Broadband: £30 per month
• Business use: 60% overall

Step 1: Add up the yearly bills.

• Mobile: £40 × 12 = £480
• Broadband: £30 × 12 = £360
• Total = £840 per year

Step 2: Apply the business percentage.

• £840 × 60% = £504 deductible

This reduces your taxable profit by £504.

If you pay income tax at 20%, that’s a tax saving of about £100.80.

If you also pay Class 4 National Insurance at 9%, you save another £45.36.

So the combined savings in this example are around £146.

Copy-and-paste phone and broadband log (template)

Here’s a simple log template you can use to keep monthly records.

Simply adjust the notes to explain your business use percentage.

Some internet/phone expense FAQs

Can I claim the cost of buying a phone or router?
Yes, if bought mainly for business you can usually deduct the cost. If it’s shared, claim only the business portion. See our capital allowances guide for sole traders.

What if I have an unlimited data plan?
Split it fairly. For example, if you estimate 60% of usage is for business, you can claim 60% of the monthly bill.

Can HMRC challenge my claim?
Yes. That’s why you need to keep records showing how you arrived at the calculation. Avoid 100% claims unless you truly have a separate business-only contract.

What if I use my personal mobile for business calls?
You can still claim the business proportion of your monthly bill. Keep a note of how many calls are business-related to justify your percentage.

Can I claim for my family’s broadband package?
Yes, but only the business share. For example, if your household broadband costs £40 a month and you reasonably estimate 40% is business use, you can claim £16 per month.

Is it easier to have a separate business contract?
Yes. If you take out a dedicated business mobile or broadband plan used solely for work, you can usually claim the full cost without apportionment.

What about installation or setup fees?
If you install a new broadband line solely for business purposes, the cost is an allowable expense. If it’s for mixed use, you must split it fairly between business and personal use.

Can I claim for apps or extra services on my phone bill?
Yes, if they are used wholly for business – for example, cloud storage, professional apps, or international calling add-ons. Personal subscriptions (like music or streaming services) can’t be claimed.

What if I sometimes work away from home?
Mobile data used for business while travelling can be claimed as part of your mobile bill. Hotel or café Wi-Fi charges for business use are also allowable.

Do the rules change if I run a limited company?
Yes. If you’re a company director, the business can pay for a phone contract directly. But if you use the same phone for personal calls, there may be a benefit-in-kind to declare. See our limited company expenses guide.

External references

For the official line, read these helpful guides.

• GOV.UK: Phone, broadband and other expenses if you’re self-employed
• GOV.UK: Simplified expenses overview
• GOV.UK: Capital allowances