The zero rate of VAT will now apply to all e-publications from 1 May 2020. In the recent Budget this measure was due to come into force in December, however the Chancellor Rishi Sunak has brought the measure forward.
Digital publications have previously been 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 change in law means that e-books, e-newspapers, e-magazines and academic e-journals are entitled to the same VAT treatment as their physical counterparts with the Treasury estimating that this will potentially slash the cost of a £12 e-book by £2 and e-newspapers subscriptions by up to £25 a year (assuming suppliers pass the saving on to customers).
This will obviously apply to newspaper and magazine suppliers but also to charities who provide access to materials such as journals and learning materials online.