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Budget 2017: VAT on international roaming

Holidaymakers will have to pay even more for using their mobiles abroad, following an announcement in the Government’s Budget yesterday.

Chancellor Philip Hammond revealed plans to add a 20% VAT charge to mobile phone roaming costs outside the EU.

So what does this mean? Will it affect your summer holiday? And what can you do to avoid getting stung?

Read on and we’ll tell you everything we know so far.

Which countries will this affect?

The 20% price rise will be added to roaming charges outside the European Union. So, if you’re heading to the continent, it won’t affect you while the UK is still in the EU. But if you’re travelling to a country that isn’t part of the EU, such as the USA, Australia or Dubai, after the charges have been applied, your bill will be 20% higher.

EU roaming charges are due to be abolished in June 2017. However, there’s no news yet on whether or not the UK will continue to benefit from this after leaving the EU.

When is this going to happen?

VAT on non-EU roaming charges are said to be coming in on 1st August 2017. So if you’re going away on holiday outside the EU before then, you won’t be affected.

If you’ve booked your summer break for any time after that, though, you’ll need to be extra careful how you use your phone or risk racking up a large bill. The good news is that below we’ve some tips to help you do exactly that.

What will this do to my phone bill?

Mobile Roaming Charges

At the moment, we don’t know if networks will pass on the extra charges to consumers or whether they’ll absorb the extra cost. If it’s the latter, the price you pay won’t actually change.

But let’s assume they do pass on their higher costs to you and me. If you’re on EE and you’re not signed up to the World Select add-on, it’d mean that a one-minute call from the US, which at the time of writing would cost you about £1, would rise to £1.20. That doesn’t sound too bad.

However, if you were to spend ten minutes calling someone from the US on EE, the price of the call would rise from £10 to £12. So it’s easy to see how your bill could start to spiral, especially given that roaming charges outside the EU are already pretty steep.

The rise in the cost of data is perhaps even more marked. Virgin Media, for instance, currently charges £5 per MB of data, which will rise to £6 if VAT is applied. And as we’ve surely all discovered, it’s very easy to get through 1GB of data if you’re using it for streaming video or making video calls.

What can I do to avoid sky-high roaming costs?

Mobile Roaming

If you’ve booked a holiday outside the EU for anytime after the 1st August 2017, you’re likely to be stung by the 20% tax rise. However, there are things you can do to avoid it.

Most of the major phone networks offer special roaming deals or travel bolt-ons to help you save money while using your phone abroad. And while it’s unclear how networks will respond to the increased roaming charges, offers like Three’s Feel at Home scheme that allows customers to use their monthly allowance for no extra cost, should still be valid. For a rundown on what each provider offers, check out our guide on the best networks for international roaming.

Alternatively, if you have an unlocked phone, it might work out cheaper for you to buy a local SIM card. The 20% VAT tax only applies to UK SIMs, so you won’t be charged the extra on a local SIM.

If you do decide to use your SIM card abroad and want to avoid running up a huge bill, switch off data roaming and connect to free Wi-Fi as much as possible.

uSwitch telecoms expert, Ernest Doku, said, "Consumers often don’t realise they’re out of range of wi-fi or they forget to turn off data roaming – so many are still getting stung by bill shock, and an additional 20% will add insult to injury.

"On the one hand, a 20% price increase might make bill shock a harder pill to swallow, on the other, it might deter more people from using their phones abroad altogether. Neither are particularly welcome advances and are something the networks will likely need to work hard to manage. In a best case scenario, networks will respond with provisions and perks to offset the higher costs.

"Given that roaming is already a contentious consumer issue, and one that will increasingly take the spotlight as Brexit talks advance, today’s news from the Chancellor shows there is greater responsibility than ever to ensure consumers are clear about how to keep their bills manageable when using their phone abroad."

For more information about roaming and tips to avoid running up a huge bill while using your phone abroad, check out our guide on international roaming charges.

Want more news on this week's Budget? Head to our round-up.

Category: Features
Tagged: networks, roaming
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