‘Telecommunications usage plans’ is Inland Revenue speak for your telephone and internet connections. IR has created rules for reimbursing employees. This includes shareholder employees.
If an employee is using the telecommunications less than half the time, then an employer can reimburse the employee for 25 percent of the costs. If it is more than half the time, the maximum reimbursement increases to 75 percent.
It is not permissible to arrange with an employee to take a smaller salary and then top them back up with the allowance.
If the purchase of an asset is involved, the reimbursement by the employer must be related to the depreciation rate each year.
These rules don’t apply to the self-employed. Generally, the maximum claim for a self-employed person for reimbursement of telecommunications costs is 50 percent, however it must be related to the actual usage.
If you’re got any questions, get in touch.