Covid-19: scrapping VAT on e-publications fast-tracked

Chancellor Rishi Sunak has fast-tracked plans to scrap VAT on e-books and e-newspapers, bringing the measures in seven months earlier than announced at the Budget, in a boost to readers and publishers during the coronavirus outbreak

The zero rate of VAT will now apply to all e-publications from 1 May. When Sunak first announced the change in March, he indicated it would come in on 1 December.

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 Chancellor’s move means e-books, e-newspapers, e-magazines and academic e-journals are entitled to the same VAT treatment as their physical counterparts.

The Treasury says this will potentially slash the cost of a £12 e-book by £2 and e-newspapers subscriptions by up to £25 a year.

In support of the print newspaper industry, the government has also announced it will be spending up to £35m on newspaper advertising over the next three months.

The spend will be split between local, regional and national print media and form part of its Covid-19 communications campaign providing updates on government guidance and advice.

Oliver Dowden, culture secretary, said: ‘This tax relief on subscriptions to digital publications will boost our world-class publishers, save consumers money and reflects the surge in popularity of e-reading as we stay at home to protect the NHS.

‘I hope to see it benefitting the news industry through increased sales of e-newspapers as they continue to provide a vital public service giving people accurate and trusted information about coronavirus.’

On average publishers are reporting an increase of about a third in e-book consumption during the crisis, with some publishers reporting as much as a 50% increase, according to publishing industry statistics.

In the last seven days alone, subscriptions to TI media are up 200%, whilst Hearst’s new subscribers were up more than 100% year-on-year across the second half of March.

Owen Meredith, managing director, Professional Publishers Association (PPA) said: ‘In these exceptional times, consumers are increasingly hungry for trusted sources of news, information and analysis and turning to the pages of magazine media, both in print and digital.

‘Ending the historic digital VAT penalty now is a benefit to consumers who are looking for trusted news and entertainment and a vital lifeline for publishers.’

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