O2 waives VAT charges for charities

90% of donations by text message passed on with new five-digit codes

Mobile phone network operator O2 has implemented a system so that VAT previously charged on text donations will be passed to charity.

Third Sector reported in July that the Mobile Data Association, the industry association for mobile data firms, had agreed to stop deducting VAT from part of each donation made to charity by text message.

A spokeswoman for O2 said it had become the first network operator to put in place the new system, which means that from this month charities will receive about 90 per cent of the money donated by its customers through SMS.

About 10 per cent more money would go to charities than before, she said.

Any UK charity that uses a dedicated five-digit short code beginning with 70 through the O2 network will qualify for the additional cash on donations of £10 or less.

Hannah Terrey, head of policy and public affairs at the Charities Aid Foundation, said: "O2's promise that charities will receive 90 per cent of a donation is a very positive move, although this still means £1 will be lost in charges on a £10 donation. 

"Eventually we would like all mobile phone companies to charge no more than 10p, whatever the size of donation, because research shows that is the maximum amount acceptable to donors."



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