Government unveils mobile phone VAT change

Date: 27th July 2009

Britain's mobile phone firms have agreed to stop charging VAT on text message charity donations from next week.

Government ministers have struck a deal with the network operators to save tax, which will see more money reach charities than before.

The move follows lobbying from groups including the Charities Aid Foundation (CAF).

Figures from the organisation suggest that just 95p of a £1.50 charity donation currently reaches its intended recipient if the money is donated via mobile phone.

VAT formed around 15p of this 55p deduction.

Hannah Terrey, head of policy and public affairs for CAF said: "It's great news that the mobile phone companies have been able to agree a way forward to end this illegal practice which is unfair on donors and charities. The most important thing for donors is to know that as much as possible of their donation goes to help the cause they want to support.

"Now that they have made this leap forward we hope the mobile phone companies will bring down their charges too."

An estimated 1.5 billion text messages are sent in the UK every week.