£65m raid on using your phone abroad

TOURISTS who use their mobile phones outside Europe will be hit with an increase in charges through a tax raid that will raise £65million a year for the Treasury.

Currently those on holiday in countries such as the US, Australia or Thailand do not pay VAT on calls or texts while they are away.

But yesterday the Chancellor announced the tax will be applied to roaming charges outside the EU, meaning bills could rise by up to 20 per cent from August 1.

If telecoms providers pass on the extra charge, a one-minute call from the US – currently about £1 with the EE network – could rise to £1.20 or more.

Virgin Media charges £1.50 a minute for a call from the US, so ten minutes could end up costing an extra £3.

Some mobile phone users pay extra for bundles of calls and texts abroad, but the price of these is likely to rise as well. Roaming charges in the EU already have VAT charged on them.

David Hickson, of the Fair Telecoms Campaign, said: ‘This is another nasty little cost and imposition on families who are already suffering. Holidays are already more expensive because of the fall in the pound and this is just a double whammy.

‘This will undoubtedly further encourage those overseas to take advantage of Wi-Fi connections to make calls.

‘With charges and internet connectivity increasing, the telephone is starting to become redundant for international calls.’

Ernest Doku, a mobiles expert at the comparison website uSwitch, said: ‘Consumers often get a shock when they go abroad and many are still getting stung by high bills – an additional 20 per cent will add insult to injury.’

The Government says the change is aimed at closing the loophole that allowed mobile phone users to avoid VAT on roaming charges outside the EU.

Forcing travellers to pay the extra charge is expected to raise up to £325million for the Treasury by 2022. It also applies to data, which smartphones use to receive and send emails, surf the internet and use apps such as Google Maps.

Virgin Media charges travellers £5 per megabyte of data in the US and this could rise to £6 with the 20 per cent increase.

Roaming charges are already a controversial issue amid concerns that Britons will also face higher bills to use their phones in Europe after the UK leaves the EU.

The EU is preparing to drop roaming charges from June and there are fears that British travellers will not enjoy the benefits after Brexit, although firms such as Vodafone have disputed this.

Mr Doku said: ‘Given that roaming is already a contentious consumer issue, and one that will increasingly take the spotlight as Brexit talks advance, the 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.’

The Treasury said the charge could cost each person using their phone abroad an extra £5 a year if telecoms firms pass it on.

Mobile firms have not confirmed that they will do this, but it is thought to be likely.

Daniel Lyons, of the accountancy firm Deloitte, said: ‘If you are using your phone in New York, you will be paying tax in the UK.

‘If you are in Australia calling Melbourne from Sydney, you will still pay tax in the UK for that call. It doesn’t matter if you’re not calling someone in the UK. I think telecoms firms will be unimpressed.’

The Government is to crack down on complex contracts and subscription traps that can cost families up to £450 each a year.

Companies such as Netflix, Apple and Amazon will not be allowed to automatically renew subscriptions without giving plenty of notice and the option to cancel.

Ministers will also set out measures to ban misleading and complex smallprint.

Watchdogs including the Competition and Markets Authority could get powers to fine rogue firms.