Insights | New businesses

Selecting the right mobile contract for your start up


There are endless decisions to make when starting up a new business, one of which is choosing the right mobile phone provider and tariff. As with most steps in the process,  as long as you work through the requirements systematically, there’s really nothing very complicated about it.

Please note: This post is a follow on from Ofcom’s starter pack for businesses post, which details key points to consider for your communications set up.

HMRC requirements:

While most new business owners tend to simply use their personal mobile phones, it’s important to be aware that there are some HMRC requirements that require a business mobile contract to be in the name of the business. This is to ensure that there are no Benefit in Kind (BIK) tax implications if the business pays for the mobile. Businesses that simply pay the employees 'private' mobile phone bills are potentially breaching new BIK HMRC rules, which were announced by Phillip Hammond in the 2016 Autumn statement.  The new rules came into effect in April 2017. However, employees who currently receive tax-free salary sacrifice benefits will continue to do so until April 2018 if their arrangements were in place prior to 5 April, 2017.

Rule of thumb is that one connection and SIM is allowed per employee - If you provide more than one phone to an employee then only one of the phones is exempt from paying and reporting. More info on the HMRC website here.

The benefits of consumer contracts is that they are generally cheaper than business contracts. If you do opt to go down the business contract route, you can transfer consumer connections to your business contract. In this case, the networks will undertake a credit check, which may or may not be successful.


Broader contract issues:

Where you are now is probably not where you want to be in a year or even six months’ time – positive, sustained growth is generally the ultimate goal. Most businesses tend to add mobile phone lines over time as and when they are needed, and this often results in a long string of contract end dates. While this won’t affect an ongoing contract, it will cause issues if you ever decide to move supplier, simply because there are always some lines still in contract. It makes switching more difficult and renewal more "expensive". The reason: the networks know that you are effectively tied-in, which means that they will be reluctant to offer you any discount to entice you to stay.

Best practice going forward:

Try to keep your contract end dates as close together as possible by using 24, 12 month or monthly rolling contracts.

  1. Regularly check your bills for out-of-allowance costs in respect of UK data, international calls and exceptionally high items. Make a note of when usage activity might change, particularly around foreign travel, and amend your bundles accordingly. All networks offer bundles to allow changes while you are in contract, which you can bolt on to your existing contract to reduce costs.
  2. Before you commit to anything, always obtain at least three quotes. Even if you favour one network above the others, getting additional quotes will offer you some bargaining leverage against your preferred network if there is a significant price difference.
  3. Remember: the mobile networks are profit orientated organisations and they will offer you the absolute minimum that they think they can get away with. Be prepared to negotiate.

To develop an understanding of what your ideal contract would offer, you can analyse your past usage of data, local calls, international calls and roaming. Alternatively, you can let Billmonitor do it for you – after all we are here to keep the mobile networks honest.

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See you soon,

Billmonitor team