- move will potentially slash the cost of e-books and newspapers making reading more accessible as people stay at home
- newspapers to receive up to £35 million additional government advertising revenue as part of coronavirus communications campaign
Plans to scrap VAT on e-books and e-newspapers have been significantly fast-tracked in a boost to readers and publishers during the coronavirus outbreak, the Chancellor announced today.
Rishi Sunak said the zero rate of VAT will now apply to all e-publications from tomorrow (1 May 2020) - seven months ahead of schedule – potentially slashing 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 £35 million on newspaper advertising over the next 3 months as part of its Covid-19 communications campaign to ensure the whole UK is aware of the latest government guidance and advice.
Chancellor of the Exchequer Rishi Sunak said:
We want to make it as easy as possible for people across the UK to get hold of the books they want whilst they are staying at home and saving lives.
That is why we have fast tracked plans to scrap VAT on all e-publications, which will make it cheaper for publishers to sell their books, magazines and newspapers.
With the nation staying in their homes during lockdown and schools closed, millions have been relying more on e-publications to pass time, home school and read the news. The Chancellor has opted to bring the zero rating forward to make entertainment more affordable for readers who are rightly staying at home during the coronavirus crisis – and are more reliant on e-publications as a result.
The price of an e-book will now be VAT-free. The e-book of Hilary Mantel’s The Mirror and The Light could be over £2 cheaper while the average tax annual saving on a typical e-newspaper or e-magazine subscription could be £25 or £20 respectively.
The move will be a boost both to readers in the form of cheaper e-books and e-newspapers, and the publishing industry who should benefit from a boost in sales.
Culture Secretary Oliver Dowden 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. 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.
The £35 million extra advertising revenue will be split between local, regional and national print media, and will be a vital boost to the media industry. These plans will be constantly reviewed over the next three months to ensure the campaign is as effective as possible.
Both the e-publications measure and the increased advertising spending are UK-wide.
A spokesperson for the Axe the Reading Tax Campaign, said:
Axing the Reading Tax with immediate effect is exactly the right response from the Chancellor in these difficult times. With people doing the right thing and staying at home it is great that they will no longer have to pay tax on e-books to keep them and their kids entertained.
Stephen Lotinga, CEO of the Publishers Association, said:
We welcome the news that the government has taken this step to significantly fast-track their plans to scrap VAT on e-books . This is a boost to publishers, readers and authors which is especially important at this difficult time. We hope that it will enable more people to easily access and benefit from the comfort, entertainment and knowledge that books provide.
Owen Meredith, Managing Director, Professional Publishers Association (PPA) said:
Today’s announcement is very welcome news and a much needed step. PPA called for the zero-rating announced in the Budget to be brought forward to the start of the tax year and I am pleased government has listened and acted.
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. As we all spend more time at home to stop the spread of this virus, subscribing to a magazine is a great way to keep entertained and indulge your hobbies and interests with trusted, quality journalism.
Jonathan Douglas, Chief Executive of the National Literacy Trust, said:
With schools and libraries now closed, it is vital that children and families are still able to access the life-enhancing world of books. Removing the VAT on digital publications will make this more of a possibility for families, for whom access to stories will provide much needed inspiration and comfort during this time of uncertainty.
Barbara Hayes, Deputy Chief Executive of the Authors’ Licensing and Collecting Society (ALCS), said:
ALCS was proud to be a part of the successful Axe the Reading Tax campaign, which called for the scrapping of VAT on e-books to bring them in line with their printed counterparts. We’re very pleased the Chancellor took note and has decided to bring this scrapping forward to tomorrow, which will ensure that e-books are more easily accessible and affordable for those who are currently staying home.
Isobel Hunter, Chief Executive, Libraries Connected said:
Since libraries closed their doors in March, e-Lending has boomed as people have turned to reading for education, entertainment and solace. E-memberships surged by 600% in the first week, and e-Lending has now trebled. Removing VAT from e-book licensing will help libraries to support children learning at home and to put more titles into readers hands at a time when they need them the most.
Nicola Solomon, Chief Executive of The Society of Authors said:
This is excellent news for authors and the wider publishing industry. We have long said that taxes on books are taxes on learning, and we have campaigned for many years for all formats - including digital publications - to be exempt from VAT. Bringing forward the zero-rating of VAT on ebooks to 1 May comes at a critical time for publishers, booksellers, authors and the readers who enjoy their work. We will be pressing for publishers and booksellers to pass on a 20% reduction on ebooks to readers straight away.
Cathy Yelf, Chief Executive of the Macular Society, said:
The government’s decision to bring forward this piece of legislation is excellent news, especially at a time when e-publications are such an important source of news and entertainment for people with sight loss.
It’s absolutely correct that electronic versions of newspapers, books and magazines are treated in exactly the same way as the physical products, and that anyone choosing to receive them in that format is not penalised financially for doing so.
This move is long overdue and should make e-publications more affordable.
Readers, who rely on large print sizes or find physical books difficult to hold, are expected to particularly benefit from digital reading being more financially accessible.
At the Budget in March, the Chancellor originally announced he would be applying a zero rate of VAT to supplies of e-publications (e-books, e-newspapers, e-magazines and academic e-journals) to support reading and literacy from 1 December 2020.
Research by the National Literacy Trust indicates that 1 in 4 pupils on free school meals say they read fiction digitally compared to 1 in 6 of their peers not eligible for free school meals and that over 45% of children prefer to read on an electronic device.
Statistics on e-book consumption provided by Publishers Association.
Statistics on TI Media and Hearst subscriptions provided by Professional Publishers Association
The government recognises the vital role that media organisations, including newspapers, play in ensuring the provision of trusted, high quality information and their ability to reach isolated and harder to reach communities, such as BAME and older communities.
In light of this, the government has established advertising partnerships with the nation’s favourite and most- trusted media titles, as a way of delivering important government communications on coronavirus. This has allowed the Government to leverage the powerful and familiar voices of over 600 national, regional and local titles across England, Scotland, Wales and Northern Ireland. It is estimated these partnerships will reach 34m people every day and 92% of adults in the UK each month.