VAT on ebooks scrapped
By any standards it’s been an unusual and challenging week in publishing. The cancellation of The London Book Fair has left many of us feeling rather discombobulated, and we’re very sorry not to be spending time at Olympia with members and our friends around the world. The spread of Covid-19 has put paid to the Bologna Book Fair too, and is starting to cause problems for businesses’ staffing and travel.
Against this backdrop, the news that the government is to abolish VAT on ebooks, online journals and other digital content is very good news. It’s not often that publishers have something to celebrate in the Chancellor’s Budget, but this is a positive decision—albeit one that should have been taken many years ago.
The new zero rating will apply from 1 December 2020, and the Chancellor said in his statement that the government “expects the publishing industry, including e-booksellers, to pass on the benefit of this relief to consumers.” If that is done, there will be no benefit to publishers’ margins—but by making content more accessible, it should stimulate extra sales of ebooks and digital journals. It’s particularly good news for the increasing number of publishers who are adopting digital-first models, putting ebooks and print on a level playing field.
It’s worth noting that the move isn’t necessarily good news for booksellers. As the Booksellers Association commented to the Bookseller this week, removing VAT doesn’t help retailers—or publishers—who only sell print copies. There is also a potential complication for journal publishers in the context of Read and Publish OA deals which are part-product and part-service, and which are therefore now exposed to differential VAT rates on different parts of the proposition. For now though, and for the majority of publishers who sell both digital and print content, this week has thankfully ended a strange anomaly in reading.
There is more about the decision to apply a zero rate of VAT to digital publications on page 52 of the Chancellor’s Budget statement.
The government’s portal for general coronavirus advice for businesses, employers and employees is here.