Budget 2017: Chancellor slaps VAT on roaming outside EU
If you’re planning to go on holiday outside of the EU this summer, then you can expect an increase in your mobile phone bill.
When presenting the Government’s Spring Budget to Parliament, Chancellor Philip Hammond announced the imposition of a 20% VAT on roaming charges for mobile calls placed outside of the EU effective 1 August.
Hammond stated that the tax is “in line with international standard practice,” and it is expected to net the Government about £65m a year.
It is not clear whether the tax will apply to calls made in EU countries by UK consumers after the expected Brexit in 2019, but Daniel Lyons, an indirect tax partner in Deloitte UK’s Tax Policy Group, thinks that it will. He stated: “”With the UK’s impending exit from the EU, it had been envisaged that VAT-free roaming would also apply to use and enjoyment of devices in the remaining EU member states. However, the Chancellor’s announcement today shows this is unlikely to be the case.”
Ernest Doku, a telecoms expert with uSwitch.com, noted that roaming charges outside the EU are already very expensive, so the 20% VAT will have a significant impact on consumers.
“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,” he commented.
“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.”