Chancellor Rishi Sunak has used his first Budget to announce the abolition of what he called ‘the reading tax’, stating that there would be no VAT charged on books, magazines or journals regardless of format from 1 December
Digital publications are currently taxed at 20% in the UK whereas printed publications have been exempt from VAT since its introduction in 1973, ‘on the general principle of avoiding a tax on knowledge’.
The government is now to introduce legislation to apply a zero rate of VAT to e-publications from 1 December 2020, which will make it clear that e-books, e-newspapers, e-magazines and academic e-journals are entitled to the same VAT treatment as their physical counterparts.
According to the Treasury, the government expects the publishing industry, including e-booksellers, to pass on the benefit of this relief to consumers. It should benefit all who read digitally, including children from poorer backgrounds: nearly one in four pupils on free school meals read fiction digitally, compared to one in six of their peers who are not eligible for free school meals.
Treasury figures indicate the zero rate VAT for e-publications will cost £60m in lost tax revenues this tax year rising to £200m in 2024/25.
