Phone and Internet Expenses for Sole Traders

Can You Claim Phone and Internet Costs?

Yes — if you use your phone or internet for business, you can claim the business proportion as an allowable expense. The key question is how much of your usage is genuinely for business, and how you calculate that split.

Most sole traders use their personal phone and home broadband for work, which means the costs must be apportioned between personal and business use. HMRC doesn't specify a fixed percentage — it's up to you to determine a reasonable split.

Mobile Phone Expenses

Separate Business Phone

If you have a dedicated business mobile phone — one used exclusively for work — you can claim 100% of the costs, including:

• Monthly contract or pay-as-you-go charges
• The handset cost (either as a revenue expense or capital allowance depending on the amount)
• Insurance
• Case, charger, and accessories

This is the simplest approach and avoids any arguments with HMRC about the business proportion.

Personal Phone Used for Business

If you use one phone for both personal and business purposes, you need to estimate the business proportion. Common approaches include:

Call log analysis: Review a month's calls and texts. Count the business ones versus personal ones. If 60% are business-related, claim 60% of the bill.

Time-based estimate: If you use your phone for business during working hours and personally outside of them, a time-based split might be appropriate.

Data usage: If most of your business use involves data (email, apps, browsing), look at what proportion of data is business-related.

HMRC doesn't require mathematical precision, but your estimate should be reasonable and defensible. A sole trader claiming 90% business use on a phone that also serves as their personal phone would need strong justification.

What About the Handset?

If you buy a new phone and use it partly for business:

• Under £500: Claim the business proportion as a revenue expense
• Over £500: Claim through capital allowances, applying the business proportion

The Annual Investment Allowance means most phone purchases can be claimed in full (business proportion) in the year of purchase.

Broadband and Internet Costs

Home Broadband

If you work from home and use your broadband for business, you can claim the business proportion. Methods for calculating this include:

Room-based: If you have a dedicated office that's one of five rooms, and you use broadband equally in all rooms, the business proportion might be 20%.

Time-based: If your broadband is used 8 hours per day for business out of 16 waking hours, you could argue 50% business use.

Usage-based: If you can demonstrate that a significant portion of your bandwidth is used for business activities (uploading files, video calls, cloud services), that forms the basis of your claim.

A common and generally accepted approach is to claim 50% of home broadband costs if you work from home regularly. This is a reasonable estimate that HMRC is unlikely to challenge for most sole traders.

Dedicated Business Internet

If you have a separate broadband connection solely for business — perhaps in a home office with its own line — you can claim 100% of the cost. This is unusual for sole traders working from home but worth considering if you have a distinct workspace.

Mobile Data

If you use mobile data for business (tethering, on-site work, travel), the same apportionment rules apply as for your phone. If your mobile data is primarily used for business, claim the appropriate proportion.

Landline Costs

If you have a home landline used partly for business:

• Line rental: Claim the business proportion
• Call charges: Claim business calls at actual cost if you can identify them, or use a percentage estimate

Many sole traders have moved away from landlines entirely, but if you use one for business calls, it remains a valid expense.

VoIP and Communication Tools

Subscriptions to business communication tools are generally 100% allowable if used exclusively for business:

• Zoom, Microsoft Teams, or Google Meet subscriptions
• VoIP services like Vonage or 8x8
• Virtual phone number services
• Call recording or transcription services

If these tools are also used personally, apply the same apportionment principles as for other mixed-use expenses.

Record-Keeping

For phone and internet expenses, keep:

• Monthly bills or statements
• A note of your estimated business proportion and how you calculated it
• Receipts for handset purchases or equipment

You don't need to log every individual call, but having a reasonable basis for your percentage claim is essential. HMRC can ask you to justify your split during an enquiry.

With Accounted, you can photograph your phone bill and send it to Penny via WhatsApp. She'll categorise it and apply your business use percentage automatically.

Common Mistakes

Claiming 100% of a mixed-use phone. Unless you genuinely never make personal calls or send personal texts on that phone, this is hard to justify.

Forgetting to claim at all. Many sole traders overlook phone and internet costs because they're "household bills." If you use them for business, they're legitimate expenses.

Not updating the split when circumstances change. If you start working from home more (or less), adjust your business proportion accordingly.

Claiming broadband twice. If you already claim working-from-home expenses using the simplified expenses method (flat rate), you cannot also claim a proportion of your broadband separately — it's included in the flat rate.

Simplified Expenses and Phone/Internet

If you use HMRC's simplified expenses for working from home (the flat-rate method at £10, £18, or £26 per month based on hours), this covers all household running costs including broadband. You cannot then also claim a proportion of broadband on top.

However, your phone costs are separate from the working-from-home flat rate. You can use simplified expenses for home costs and still claim your phone's business proportion separately.

How Much Could You Save?

A typical sole trader might have:

• Mobile phone contract: £40/month = £480/year
• Home broadband: £35/month = £420/year

If business use is 50% for both:

• Annual claim: £450
• Tax saving at 20% basic rate: £90
• Tax saving at 40% higher rate: £180

It's not a fortune, but it adds up — especially when combined with all your other allowable expenses. Check our pricing page to see how Accounted helps you capture every deduction.

Don't leave legitimate expenses unclaimed. Sign up to Accounted and let Penny track your phone and internet costs automatically.