Budget 2020 reaction: Christmas comes very early for book lovers

The Chancellor announced as part of his Budget speech today that the government would introduce legislation to apply a zero rate of VAT to e-publications from 1 December 2020, to make it clear that e-books, e-newspapers and e-magazines will be entitled to the same VAT treatments as their physical counterparts. 

Philip Munn, VAT partner at leading audit, tax and consulting firm RSM, comments: ‘Today, Christmas came very early for reading enthusiasts, or indeed those who might be spending most of their hard-earned cash on books for Christmas! The Chancellor announced a zero rate of VAT on all digital reading products, to kick in from 1 December of this year.

‘This announcement brings the UK into line with many other EU member states that have announced VAT rate reductions for e-publications over the last few years after previous legislation blocking the relief was removed from the EU VAT directive. It shed new light on the ongoing litigation between HMRC and News Corp, which is claiming that UK VAT law has always permitted zero-rating for digital subscriptions for The Times and The Sunday Times.’ 

While the details of these changes will be revealed at a later date as part of the consultation on the legislation, the government expects that this reduction in the VAT rate will be passed to consumers.