VAT on Books, Newspapers and Electronic Publications

Introduction

If you publish, sell, or distribute books, newspapers, magazines, or their electronic equivalents, understanding VAT treatment is essential. Most printed publications and their electronic versions can be zero-rated for VAT, meaning no VAT is charged on the sale. However, there are important exceptions and conditions you need to know about, particularly when it comes to advertising content, audiobooks, and bundled products.

What qualifies for zero-rating

Printed publications

The following printed items qualify for zero-rating:

• Books and booklets
• Brochures, pamphlets, and leaflets
• Newspapers, journals, and periodicals (including magazines)
• Children's picture books and painting books
• Printed music (including duplicated or manuscript versions)
• Maps, charts, and topographical plans

These items must be produced on paper or similar materials such as card. The words are used in their ordinary, everyday sense. Most qualifying items are products of the printing industry, but photocopied, typed, or handwritten goods can also qualify in some cases.

Electronic publications

From 1 May 2020, electronic versions of the following publications are also zero-rated:

• Books and booklets
• Brochures, pamphlets, and leaflets
• Newspapers, journals, and periodicals (including magazines)
• Children's picture books and painting books

"Supplied electronically" includes supplies made over the internet and by email. The extension applies only to electronic versions of books that can be read or looked at.

What doesn't qualify for zero-rating

Advertising-heavy publications

If more than half of an electronic publication is devoted to advertising, audio, or video content, you must charge the standard rate of VAT.

Example: An auction house sells electronic brochures containing information about lots in a forthcoming auction. Since the brochure is predominantly advertising, its sale is standard-rated.

Audiobooks

Audiobooks remain standard-rated whether supplied in physical or digital format. Zero-rating is limited to electronic versions of books that can be read or looked at, not listened to.

Example: A business supplies an electronic audiobook narrated by a well-known actor, designed only to be listened to. Since this audiobook is wholly devoted to audio content, its supply is standard-rated.

Printed items that are standard-rated

The following printed items are standard-rated, even if they might appear book-like:

• Books of plans or drawings for industrial, architectural, engineering, commercial, or similar purposes
• Picture card and stamp albums (unless they contain a substantial amount of reading matter complete in itself, with no more than 25% set aside for mounting cards and stamps)
• Completed stamp albums
• Products that are essentially stationery items, such as diaries and address books

Intellectual property and technical documents

Supplies of intellectual property are always standard-rated, even if supplied electronically. Electronically supplied plans or drawings for industrial, architectural, engineering, commercial, or similar purposes are specifically excluded from zero-rating.

E-book readers and software

E-book readers are hardware devices and are not themselves e-books, so they're standard-rated (unless they meet certain conditions as assistive technology for disabled people). Similarly, software or apps used to access e-publications are standard-rated because they are not themselves e-publications.

Publications designed for completion

Printed publications primarily intended for completion or detachment cannot be zero-rated. A publication is acceptable if 25% or less of its total area consists of blank areas available for completion or parts to be detached and returned. Where there is both an area for completion and a part to be detached, the two together must not exceed 25% of the total area.

School workbooks and educational texts in question-and-answer format are zero-rated because the spaces for answers are incidental to the essential character of the book or booklet. The same applies to exam papers in question-and-answer format, provided they qualify as books, booklets, brochures, pamphlets, or leaflets.

However, electronic publications predominantly for completing are standard-rated, unless they are electronic versions of printed books already included within the zero rate, or electronically supplied children's picture or painting books.

Lending of electronic publications

If you charge for lending any zero-rated electronic publications (for example, by a library), this service is also zero-rated.

Bundled supplies and packages

When you supply a zero-rated electronic publication together with something else, you need to determine whether you're making a single supply or multiple supplies.

Single supply: You make one supply where one element is the principal element to which all other elements are ancillary. Indicators include a single price, advertising as a package, components not available separately, supplied at the same time, and customers perceiving a single supply.

Multiple supplies: You make more than one supply where elements are distinct and independent. Indicators include separate pricing or invoicing, items available separately, time differential between parts, and elements that are not interdependent or connected.

Example 1: A business offers customers access by subscription to an electronic newspaper and a printed newspaper. Since both are zero-rated, the subscription is zero-rated.

Example 2: A business offers to sell an electronic audiobook and a printed book at a discounted price. Since both products are available separately and the elements are not interdependent, there are two separate supplies: one standard-rated audiobook and one zero-rated book.

Defining leaflets in detail

Leaflets normally consist of a single sheet of paper not greater than A4 in size. Larger publications up to A2 size can be zero-rated provided they're printed on both sides, folded down to A4 size or smaller, and meet other conditions.

To qualify as a leaflet, the item must:

• Be intended to be held in the hand for reading by individuals (not for hanging up for general display)
• Convey information
• Be complete (not a part work)
• Be supplied in sufficient quantity (at least 50 copies) to permit general distribution
• Be printed on limp paper
• Be either ephemeral in nature (designed to be read a few times and discarded) or designed to accompany another product or service

Items printed on stiff paper or card are not automatically excluded, but their use indicates the items may have a function that would exclude them from being leaflets. Items printed on laminated paper are considered designed to be kept and therefore not leaflets. However, orders of service are not normally designed to be kept and may be zero-rated.

Sources

• Zero rate of VAT for electronic publications
• Zero rating books and printed matter (VAT Notice 701/10)

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.