Mobile roaming outside the EU will be subject to UK VAT, the Chancellor has announced, in a move that's likely to result in millions of holidaymakers paying more to use their phone abroad.

VAT – a 20% tax that's usually passed on to the consumer – is currently charged on mobile phone roaming usage within the EU. It will also apply to usage outside the EU from 1 August 2017.

In his Budget speech, Chancellor Philip Hammond said the Government would "introduce UK VAT on roaming telecoms outside the EU in line with international standard practice".

Roaming charges can be eye-wateringly expensive – if you're not careful, you can rack up a bill of £100s or even £1,000s using your mobile abroad. See our Cheap Mobile and Data Roaming guide for info on how to use your phone abroad for less.

How much are roaming charges as things stand?

If you're using your mobile outside the EU, charges vary by network and country but can be steep. For example, Three currently charges customers using their phone in China £2/min to make a call, £1.25/min to receive a call, 35p to send a text and a hefty £6/MB to use data.

There's a €50 cap on how much you can be charged for data used anywhere in the world within a single month, unless you opt out (signing up to a roaming bundle often constitutes opting out).

Within the EU, roaming charges are currently capped (see EU roaming caps for full details) and are set to be banned altogether this June. Yet when the UK leaves the EU (which won't be for two years at least), EU rules on roaming charges will no longer apply.