Zero rate your e-publication now!

The Chancellor, Rishi Sunak, announced on 30th April 2020 that the government was accelerating the introduction of a zero rate of VAT on e-publications.

The Chancellor had announced as part of the 2020 Budget, on 11th March 2020, that a zero rate of VAT would apply to e-publications from 1 December 2020, removing the so-called 20% ‘reading tax’.

However, the zero rate on e-publications came into effect on 1st May 2020.

The Chancellor 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.”

Who is likely to be affected?

Businesses that supply certain electronic publications, as well as businesses, organisations and members of the public that purchase those publications.

What is covered by the new zero rate?

The following electronically supplied products are now eligible for the zero rate of VAT:

  • Books
  • Booklets
  • Brochures
  • Pamphlets
  • Leaflets
  • Newspapers
  • Journals and periodicals – including magazines
  • Children’s picture and painting books
  • The lending of any of the above zero-rated e-publications for a charge

What is NOT covered by the new zero rate?

There are some items that are not included in the publications eligible for the zero rate of VAT.

  • E-publications which are wholly or predominantly devoted to advertising or to audio or video content (e.g. where more than half of an e-publication is devoted to advertising or to audio or video content)
  • Audiobooks
  • Intellectual Property
  • Electronically supplied plans or drawings for industrial, architectural, engineering, commercial or similar purposes
  • An e-publication that is predominantly for completing, unless it is an electronic version of a printed book whose supply is already included within the zero rate or an electronically supplied children’s picture or painting book

Zero rated e-publications supplied together with other supplies

Where a transaction consists of more than one element, for example where a zero-rated e-publication is supplied together with something else, it is necessary to determine whether a single supply or multiple supplies are being made.

A single supply is made where one element of the supply is the principal element to which all other elements are ancillary.

Multiple supplies are made where the various elements of the supply are distinct and independent.

Single versus multiple supplies is a complex area of VAT and specialist advice should be sought.

New anti-avoidance legislation has also been introduced to counter the potential use of avoidance schemes similar to those entered into by some businesses that artificially split supplies so the businesses could benefit from the zero rate for printed matter.

How we can help

Our team can assist businesses understand whether their supplies will qualify for the new zero-rate, particularly where zero rated e-publications are supplied together with another supply.

If you think these changes will apply to you and need further assistance or advice, our team are on hand to help.

Contact us

Hydeam Sulton (Head of VAT and Indirect Tax) – hydeam.sulton@taitwalker.co.uk

Ryan Griffiths (Tax Executive) – ryan.griffiths@taitwalker.co.uk