VAT Zero Rating Extended to e-Publications

What is the change?

The government has brought forward the introduction of VAT Zero Rating for certain supplies of e-publications to support literacy and reading in all its forms.

When does this apply?

The new zero rating will apply from 1 May 2020 (rather than 1 December 2020 as previously announced)

What ‘supplied electronically’ means

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.

What is included?

With effect from 1 May 2020, electronic supplies of the products listed below, unless they are wholly or predominantly devoted to advertising, audio or video content will be zero rated:

  • books
  • booklets
  • brochures
  • pamphlets
  • leaflets
  • newspapers
  • journals and periodicals (which include magazines)
  • children’s picture and painting books
  • the lending of any of the zero rated e-publications for a charge (for example, by a library)

What will not be included?

Advertising – If more than half of an e-publication is devoted to advertising, audio or video content, its supply will be standard rated for VAT purposes.

Audiobooks – Zero rating will only apply to the supply of electronic versions of books already zero rated in UK law. As such, zero-rating is limited to electronic versions of books that can be read or looked at. Supplies of audiobooks remain taxable at the standard rate whether supplied in a physical or digital format.

Intellectual property – Supplies of intellectual property, even if they are supplied electronically, are not supplies of e-publications and are always standard rated. Further, electronically supplied plans or drawings for industrial, architectural, engineering, commercial or similar purposes are specifically excluded in the legislation.

Publications for completing – The supply of an e-publication that is predominantly for completing, unless it is an electronic version of a printed book whose supply is already included within the zero rate or an electronically supplied children’s picture or painting book which is now specifically zero rated by UK legislation, is standard rated.

E-book readers – E-book readers are one form of hardware to which e-books can be downloaded before being read but are not in themselves e-books. Therefore, supplies of e-book readers are standard rated.

Software – Software (for example an ‘app’) is used to access e-publications but is not in itself an e-publication. Therefore, supplies of such software are standard rated.

Does the Zero-Rating apply retrospectively?

HMRC policy is that supplies of all e-publications are standard rated for VAT purposes until the changes outlined take effect on 1 May 2020 and has no retrospective effect.  This is based on the view that Zero Rating in this context only applies to goods, not services.  This position is currently subject to legal challenge however in the lead case on the matter ‘News Corp and Ireland Limited’.’

Where an e-publisher considers that the decision in News Corp applies to its own supplies of digital publications it can make a ‘protective’ claim now, by providing HMRC with full details in writing.  Based on their current policy, HMRC will issue a decision rejecting the claim but taxpayers then have the right to protect that claim to overpaid VAT by appeal.

If you have any questions, please email our VAT Partner, Alan Davis on