New contract - VAT increase

somepegs

I want to purchase a new phone with a new contract, and wondered whether it is more beneficial to get one before the VAT increase to 20% in January 2011, or wait until after?

I've been led to think that if I get a £25 monthly contract this will increase by the 2.5% once the new charges hit, whereas if I wait then the big companies are likely to still advertise £25 contracts and absorb this extra cost.

What do you think?

DUTR

Well, the tariffs are set +vat, when the vat was reduced, the vat was adjusted to reflect this on the bills.

somepegs

Sorry, I'm on pay-as-you-go so probably asking a really stupid question!

So mobile phone contracts are always +VAT on top of the standard contract fee? Basically meaning it will make no difference?

FleetFanatic

When they advertise a tariff as £xx a month, it includes VAT. The bill will show the cost before VAT, & then add the VAT to produce the total.
What happened on pay as you go, for example, with 02, was that when the VAT rate was cut, they simply gave you the extra bit in credit, so a £10 top up gave you slightly more than £10.

So I think that come January, when VAT goes up, tariffs will still be shown as round figures,with either them swallowing the slightly higher VAT or the packages having reduced minutes, etc.