VAT eliminated on e-publications

The Chancellor has announced that the removal of VAT on e-publications such as books and newspapers will be brought forward from 1 December to 1 May 2020.

From 1 May all sales of e-books and e-newspapers, previously subject to VAT at 20%, will be free of VAT, potentially reducing the cost of buying e-books online and subscribing to online newspapers and other publications.

Plans to scrap the VAT charge have been accelerated to help readers and publishers during the coronavirus outbreak.

The change will mean a saving for readers of £2 on a £12 e-book and up to around £25 a year on an e-newspaper subscription. This will help make online publications more affordable for those staying at home during the current lockdown.

Readers, who rely on large print sizes or find physical books difficult to hold, are expected to particularly benefit from digital reading being more financially accessible.

At the recent Budget, the Chancellor announced he would be applying a zero rate of VAT to supplies of e-publications (e-books, e-newspapers, e-magazines and academic e-journals) from 1 December 2020.

This followed HMRC losing an appeal at the Upper Tax Tribunal in December 2019 where the publishers of The Times successfully argued that digital versions of its newspapers were not a service and should not therefore be subject to VAT. Print newspapers are already zero rated for VAT, while all online versions and website subscriptions have to include VAT at 20%.

Update 29 May 2020

Although The Times won their case, their digital subscription price of £26 (£21.67 + £4.33 VAT) per month is to remain the same, they have confirmed. So the digital subscriber does not benefit from the case.