HMRC has scrapped VAT completely off e-books and e-publications from 20% down to 0%. In an effort to make reading more accessible for the UK public while in self-isolation due to the Coronavirus, HMRC fast-tracked the motion and implemented it seven months ahead of schedule.
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.’
HMRC published its guidance on the zero-rating of certain electronic publications.
According to HMRC, the term ‘supplied electronically’ is not defined in legislation. It falls to be interpreted in accordance with its generally accepted meaning and includes supplies made over the internet and by e-mail.
However, HMRC made it clear that certain e-publications will not be entitled to a zero vat rating such as Advertising (like the sale of e-brochures by auction houses), Audiobooks and intellectual property.
Which Items will be zero-rated?
HMRC list the following items that are now eligible for the zero rate of VAT: books, booklets, pamphlets, leaflets, newspapers, journals & periodicals, magazines, children’s picture and painting books.
It is important to note that the devices or software in which you acquire to read any e-books or e-publications will still be charged with the UK standard VAT rate of 20%. This includes e-book readers such as kindle and any apps that are used to access e-publications or e-books.