Why is there a VAT difference between print and digital books?

Ever since the UK’s VAT regime was established in the 1970s, printed books have been zero-rated, as it was recognised that books were essential to people’s lives. However advances in digital technology means the way people are reading books is changing, and VAT policy has not kept pace.

 

What would be the impact of VAT reduction?

Removing the VAT from ebooks and epublications would mean that people who buy them would benefit from lower prices. The impact on the government would be a modest reduction in VAT revenues and is small relative to reduced VAT revenues from other goods and services which are zero-rated, including caravans and hot takeaway food.

 

Why should digital books be singled out for a tax reduction over other things?

The current VAT system applied to ebooks is unfair. People should not have to pay more for a book just because of the way they choose to read it. Charging VAT on digital publications runs counter to the government’s own principled objection to taxing knowledge, as well as its attempts via its Digital Strategy to make the UK a leading digital nation.

 

What will happen if it isn’t removed?

UK consumers will still have to pay 20% more on ebooks and other epublications compared to their printed counterparts. EU countries, including France, are in the process of reducing the rate of tax charged on digital publications. If the government doesn’t act quickly it risks the UK digital policy falling behind our European competitors.​

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What benefits do digital books have over print books?

Ebooks are particularly useful for a variety of groups across society. For example, ebooks are a great innovation for the blind and partially sighted, who can read in the largest print sizes; for older people; and for disabled people who may lack the physical capabilities to handle print books easily.