Zero rate of VAT for electronic publications
Find out about the zero rate of VAT for certain electronic publications.
This guidance gives you information about zero rate supplies of certain electronic publications (e-publications). The changes were originally intended to take effect from 1 December 2020. However, following the outbreak of the coronavirus (COVID-19) pandemic the date has been brought forward to 1 May 2020.
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.
Items that are not entitled to the VAT zero rate
There are some items that are not included in the publications eligible for the zero rate of VAT.
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.
Example
An auction house sells e-brochures containing information about lots in a forthcoming auction. Since the e-brochure is predominantly advertising, its sale is standard rated.
Audiobooks
The extension only applies 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.
Example
A business supplies an e-audiobook that is narrated by a well-known actor. It is designed only to be listened to. Since this e-audiobook is wholly devoted to audio content, its supply will be standard rated for VAT purposes.
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.
Items that are entitled to the VAT zero rate
The following electronically supplied products are now eligible for the zero rate of VAT:
- books
- booklets
- brochures
- pamphlets
- leaflets
- newspapers
- journals and periodicals - including magazines
- children’s picture and painting books
Lending of electronic publications
The lending of any of the zero rated e-publications for a charge (for example, by a library) is zero rated.
Zero rated e-publication supplied together with another supply
Where a transaction consists of more than one element, for example where a zero rated e-publication is supplied together with something else, it is necessary to determine whether the supplier is making a single supply or multiple supplies.
The suppler makes a single supply where one element of the supply is the principal element to which all other elements are ancillary.
The supplier makes multiple supplies where the various elements of the supply are distinct and independent.
Indicators of a single supply include:
- a single price
- the supply is advertised as a package
- the components are not available separately
- the components are supplied at the same time
- the customers perceive that what they are getting is a single supply
There are multiple supplies where two or more element is distinct and independent. Indicators of more than one supply taking place include:
- separate pricing or invoicing
- the items are available separately
- there is a time differential between parts of the supply
- elements of the supply are not inter-dependent or connected
You can find out more information about this in VATSC11100.
Example 1
A business offers its customers access, by subscription, to an e-newspaper and a printed newspaper. Since the e-newspaper and printed newspaper are both zero rated, the subscription will be zero rated for VAT purposes.
Example 2
A business offers to sell an e-audio book and a printed book at a discounted price. Since both products are available to be purchased separately and the elements of the supplies are not inter-dependent, there are two separate supplies: one of a standard rated audio book and the other of a zero rated book.
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 and software
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 (unless they meet certain conditions and are sold as part of an assistive technology system – see VAT Notice 701/7 for further information).
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.
More information
You can find out more information about zero rating books and printed matter in VAT Notice 701/10.