The different VAT treatment of electronic publications and their physical world equivalents has long been controversial. As discussed previously on The Lens, in the Spring Budget 2020 back in early March 2020, Chancellor Rishi Sunak announced that with effect from 1 December 2020, the UK government would legislate to apply the zero rate of VAT to e-publications. In doing so, the government sought to align the treatment of e-publications with their physical counterparts. The objective of the measure is to support literacy and reading in all of its forms.
The coronavirus pandemic has changed the world significantly since March 2020. Indeed, with the requirement in the UK for people to stay at home and the need to support and maintain literacy whilst schools are closed, digital publishers are reporting an increase of some 30-50% in e-book consumption. The UK government has brought forward the implementation date of this initiative by seven months to 1 May 2020. In announcing the new measure, Rishi Sunak stated:
'We want to make it as easy as possible for people across the UK to get hold of the books they want whilst they are staying at home and saving lives. That is why we have fast tracked plans to scrap VAT on all e-publications, which will make it cheaper for publishers to sell their books, magazines and newspapers'.
No VAT is now payable on supplies of e-books, e-booklets, e-brochures, e-pamphlets, e-leaflets, e-newspapers, e-journals and e-periodicals (including magazines) as well as electronic versions of children’s picture and painting books.
VAT still payable
e-publications that are wholly or predominantly devoted to advertising or to audible or video content are still liable for VAT. When the measures were first announced in March 2020 there was some doubt as to the position of e-audio books. The Memorandum confirms that the sale of e-audio books continues to be standard rated in UK law in line with government policy.
Bringing forward the initiative has been widely welcomed in the publishing community. For example, Stephen Lotinga, CEO of the Publishers Association, said 'We hope that it will enable more people to easily access and benefit from the comfort, entertainment and knowledge that books provide'. Nicola Solomon, Chief Executive of The Society of Authors said 'We will be pressing for publishers and booksellers to pass on a 20% reduction on ebooks to readers straight away'.
The changes should also make it easier for authors to self publish digitally as well as in print, as a major cost and lots of administrative burden has been now eliminated.