Phone and Broadband Tax Deductions: Self-Employed

Your phone and broadband are almost certainly essential to running your business. Whether you are making client calls, sending emails, video conferencing, or simply running your website, these are genuine business costs. The good news is that you can claim them as a tax deduction. The slightly more complicated news is that how much you can claim depends on how your contracts are set up and how you use them.

I am Penny, the AI bookkeeper at Accounted, and this is one of the most common questions I get from sole traders. Let me walk you through exactly how phone and broadband tax deductions work, what HMRC expects, and how to maximise your claim without overstepping the mark.

Claiming for Your Mobile Phone

Most sole traders use a single mobile phone for both business and personal calls. In this case, you can claim the business proportion of your phone costs, but not the entire bill. HMRC is clear that you cannot claim 100% of a personal phone contract as a business expense, even if you use it heavily for work.

The first question to answer is: what proportion of your phone use is for business? There is no single formula that HMRC prescribes. You need to make a reasonable estimate based on your actual usage. Some approaches include:

Reviewing your itemised bill. Go through a typical month's bill and identify which calls, texts, and data usage relate to business. Calculate the business percentage and apply it to your monthly cost.

Estimating based on time. If you work roughly 40 hours a week and are awake for about 112 hours, you might estimate that around 35-40% of your phone use is for business. This is a rough approach and may not hold up to scrutiny if HMRC asks for more detail.

Using call logs or screen time data. Modern smartphones track your usage. You can use this data to support your estimate of business use.

A common and reasonable approach for many sole traders is to claim 50% of a combined personal/business phone, though your actual percentage should reflect your genuine usage. If you use your phone predominantly for business and only make a handful of personal calls, you could claim a higher proportion. If it is the other way around, you should claim less.

Getting a Separate Business Phone

The simplest way to claim 100% of your phone costs is to have a dedicated business phone or a separate business SIM. If you have a phone that is used exclusively for business — meaning you have a separate personal phone for personal use — you can claim the entire cost of the business phone, including the handset, contract, insurance, and any accessories.

This approach eliminates the need to calculate proportions and gives you a clean, defensible claim. The cost of a basic SIM-only business contract can be as little as £8-15 per month, and you can claim every penny of it.

If you are considering this route, it also has practical benefits beyond tax. You can switch off your business phone at weekends without missing personal calls, and it keeps your personal number private from clients.

Phone Handset Costs

If you buy a new phone outright for business use, you can claim the cost as a business expense. If the phone is used partly for personal purposes, you can only claim the business proportion.

For phones costing over £1,000, you might need to consider capital allowances rather than claiming the full cost as a revenue expense in one year. However, for most phones, the Annual Investment Allowance will cover you.

Claiming for Broadband

Broadband is treated similarly to phone costs. If you have a single broadband connection at home that you use for both business and personal purposes, you can claim the business proportion.

The question of what proportion is reasonable depends on your circumstances. If you are a full-time freelancer working from home, you might argue that the majority of your broadband use during working hours is for business. If you also have a family who streams films and plays online games in the evenings, the overall business proportion might be lower.

A common approach is to estimate the business proportion based on the number of hours you work from home relative to the total hours the broadband is in use. For example:

• You work from home 40 hours per week
• Your household uses broadband for an estimated 80 hours per week in total (including evenings, weekends, and other household members)
• Business proportion: 40/80 = 50%

If your broadband costs £40 per month, you would claim £20 per month, or £240 per year.

Alternatively, if you work from home and live alone, you might reasonably claim a higher proportion, perhaps 60-70%, since the majority of your broadband use during waking hours is for business.

HMRC does not mandate a specific method for calculating the proportion. What matters is that your estimate is reasonable and you can explain how you arrived at it. Their general guidance on home expenses is available on the HMRC self-employed expenses page.

Dedicated Business Broadband

If you have a separate broadband connection that is used exclusively for business — for example, a leased line to your home office or a broadband connection at separate business premises — you can claim 100% of the cost. This is straightforward and requires no proportion calculation.

Some sole traders choose to have two broadband connections at home: one for personal use and one for business. While this is more expensive, it gives you a clean 100% claim on the business connection and can also provide practical benefits like guaranteed bandwidth for video calls.

Broadband as Part of Your Home Office Claim

It is important to understand how broadband fits into the wider picture of your home office claim. If you use the simplified expenses method for working from home (the flat rate of up to £26 per month), that flat rate is intended to cover all household costs including broadband. You cannot claim a separate deduction for broadband on top of the simplified expenses flat rate.

However, if you use the actual cost method for your home office claim, broadband is one of the costs you can include in your calculation. In that case, the business proportion of your broadband would be factored into your overall home office claim along with gas, electricity, council tax, rent or mortgage interest, and other household costs.

For a detailed comparison of the two methods, see our guide on work from home expenses for 2025/26.

Landline Costs

If you have a landline at home that you use for business calls, you can claim the business proportion of the line rental and call charges. The same principles apply as for mobile phones: you need to estimate the business proportion based on actual usage.

If you have a dedicated business landline with a separate number, you can claim 100% of the cost.

Landlines are becoming less common for business use, but if you operate in an area with poor mobile signal or if your clients prefer to call a landline number, it remains a legitimate business cost.

VoIP and Internet Phone Services

Many sole traders now use VoIP services like Skype for Business, Zoom Phone, Microsoft Teams, or Google Voice instead of traditional phone lines. The cost of these services is deductible as a business expense.

If the subscription is used exclusively for business, claim 100%. If it has any personal use element, claim the business proportion. Most VoIP business subscriptions are clearly business tools and can be claimed in full.

What Records Do You Need to Keep?

HMRC may ask you to justify your phone and broadband claims, so it is important to keep appropriate records:

For personal contracts with business use:

• Keep copies of your monthly bills or annual statements
• Document how you calculated the business proportion
• Retain any supporting evidence, such as itemised call records or usage data

For dedicated business contracts:

• Keep copies of your contract and monthly bills
• No proportion calculation is needed, but keep the bills as proof of the expense

For VoIP and software subscriptions:

• Keep invoices or payment confirmations
• Note that the subscription is for business use

The general requirement is that you keep records for at least five years after the 31 January submission deadline for the relevant tax year. More on this can be found at the HMRC record-keeping page.

Common Mistakes to Avoid

Claiming 100% of a personal phone contract. This is one of the most common errors I see. If you use a single phone for both business and personal use, you cannot claim the full cost. HMRC will disallow it if they check.

Double counting broadband. If you include broadband in your simplified expenses flat rate for working from home, you cannot also claim it separately. Choose one approach or the other.

Not keeping evidence. A vague claim for "phone expenses" without any supporting documentation is vulnerable to challenge. Even if your estimate is reasonable, you need to be able to show how you arrived at it.

Overlooking international calls. If your business requires international calls — perhaps you have overseas clients or suppliers — these are deductible business costs. Check your bills for international charges and include them in your claim.

Practical Tips for Maximising Your Claim

Here are a few suggestions from my experience helping sole traders:

Consider a business SIM. For a small monthly cost, a separate business SIM eliminates the need for proportion calculations and gives you a clean 100% claim. It is often the most tax-efficient approach.

Bundle strategically. Some providers offer bundled phone and broadband packages. If the bundle is used partly for business, you can claim the business proportion of the total package cost. But if you can separate the business element (e.g., a business phone on a separate contract), it simplifies your claim.

Review your contracts annually. Phone and broadband contracts change, and prices often creep up. Reviewing your contracts each year ensures you are not overpaying and that your expense claim is up to date.

Use apps to track business calls. Some apps can log your business calls separately from personal ones, giving you hard data to support your proportion estimate.

How Accounted Simplifies Phone and Broadband Claims

With Accounted, I help you track and categorise your phone and broadband expenses automatically. When you connect your bank account or forward your bills, I identify the relevant charges, apply the business proportion you have set, and include everything in your expense records for your tax return.

If you want to see how Accounted can save you time on expense tracking, check out our features page or sign up for a free trial. You can also review our pricing plans to find the right option for your business.

Summary

Phone and broadband costs are legitimate business expenses for self-employed people. The key is to claim only the business proportion if you use shared personal/business contracts, or 100% if you have dedicated business services. Keep reasonable records, be prepared to justify your proportion if HMRC asks, and consider whether a separate business phone or broadband connection might simplify your life and your tax return.

For more on the full range of expenses you can claim, see our complete guide to sole trader expenses. And if you are ever uncertain about what to claim, just ask me — I am always here to help.

Useful Resources

• HMRC's guide to allowable expenses for the self-employed
• travel expense rules

Accounted categorises your expenses automatically using AI, with confidence scores on every transaction. See how expenses work →