Industry News

VAT Scrapped on E-publications

Plans to scrap VAT on e-publications fast-tracked and will come into force tomorrow.

Plans to scrap VAT on e-magazines, e-books and e-newspapers have been significantly fast-tracked in a boost to readers and publishers during the coronavirus outbreak, the Chancellor announced today.

Technical Guidance note on the application of the zero-rate can be found here: https://www.gov.uk/guidance/zero-rate-of-vat-for-electronic-publications

Rishi Sunak said the zero rate of VAT will now apply to all e-publications from tomorrow (1 May 2020) – seven months ahead of schedule – potentially slashing the cost of a £12 e-book by £2 and e-magazine and e-newspaper subscriptions by up to £25 a year.

In support of the print newspaper industry, the government has also announced it will be spending up to £35 million on newspaper advertising over the next 3 months as part of its Covid-19 communications campaign to ensure the whole UK is aware of the latest government guidance and advice.

Chancellor of the Exchequer Rishi Sunak said:

"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."

With the nation staying in their homes during lockdown and schools closed, millions have been relying more on e-publications to pass time, home school and read the news. The Chancellor has opted to bring the zero rating forward to make entertainment more affordable for readers who are rightly staying at home during the coronavirus crisis – and are more reliant on e-publications as a result.

PPA MD Owen Meredith said: “Today’s announcement is very welcome news and a much needed step. PPA called for the zero-rating announced in the Budget to be brought forward to the start of the tax year and I am pleased government has listened and acted.

“In these exceptional times, consumers are hungry for trusted sources of news, information and analysis and turning to the pages of magazine media, both in print and digital. Ending the digital VAT penalty now is a vital lifeline as publishers adapt to these exceptional circumstances. As we all spend more time at home to stop the spread of this virus, subscribing to a magazine is a great way to keep entertained and indulge your hobbies and interests with trusted, quality journalism.”

The move will be a boost both to readers in the form of cheaper e-magazines, e-books and e-newspapers, and the publishing industry who should benefit from a boost in sales.

On average publishers are reporting an increase of about a third in e-book consumption during the crisis, with some publishers reporting as much as a 50% increase. In the last seven days alone, subscriptions to TI media are up 200%, whilst Hearst’s new subscribers were up more than 100% year-on-year across the second half of March.

The £35 million extra advertising revenue will be split between local, regional and national print media, and will be a vital boost to the media industry. These plans will be constantly reviewed over the next three months to ensure the campaign is as effective as possible.

Both the e-publications measure and the increased advertising spending are UK-wide.

Further information can be found in Zero rate of VAT for electronic publications.

VAT Notice 701/10 and VBOOKS will be updated by 31 July 2020.

There is a specific HMRC email to contact with queries:epublications@hmrc.gov.uk.

For questions relating on how the new rules operate in practice, please contact VAT enquiries GOV.UK using the link  https://www.gov.uk/government/organisations/hm-revenue-customs/contact/vat-enquiries.

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