In 1991, the Conservative Government introduced a taxable benefit of £200 on employees who used their business mobile telephones for private calls. In those days, mobile phones were the size of bricks and only a few highly paid employees carried them. By the end of the 1990s, mobiles had reduced to a more practical size, were increasingly ubiquitous and had become a business necessity.

Under Labour, Chancellor Gordon Brown abolished the £200 taxable benefit, and since 1999 employers have been able to provide any number of mobile phones to their employees completely tax-free. Even if an employee's spouse or child uses the phone, the employer can pick up the phone bill with no liability to tax.

However, according to the government the tax break was abused, so as of 6 April 2006, employers have been able to provide only one tax-free mobile phone per employee, and that phone cannot be given to a member of the employee's family.

The changes did not affect mobile phones provided before 6 April 2006.

Top-up cards

Regarding the tax treatment of phone top-up cards and other phone related vouchers, where an employer gives employees top-up cards to pay for calls on their business provided mobiles, the employee is taxed on the value of those vouchers. This tax charge was removed on 6 April 2006 if the mobile itself is tax-free.

Computer equipment

The Government also withdrew the tax-free status of computer equipment lent to employees. Although this scheme had been viewed as an excellent way to improve workers' computing skills and to encourage home-learning generally, the Government felt it had been abused.

Since 6 April 2006 businesses have no longer been able to provide any more computers to their employees to be used for non-business purposes. Any computer equipment loaned to employees before 5 April 2006 was not taxed, but computers provided to employees under agreements made after 5 April 2006 are taxed as a benefit-in-kind.