Insights News Media Association reports on Chancellor’s announcement of zero rate VAT for e-publications


In the Spring Budget 2020 Chancellor Rishi Sunak announced that e-books, e-newspapers, e-magazines and academic e-journals will be VAT zero-rated from 1 December 2020.

The NMA quotes Mr Sunak from his Budget speech in the House of Commons, in which he said: “Our greatest export to the world is our language. Our greatest asset is the free exchange of ideas and debate. And our greatest responsibility is the education of our people. A world-class education will help the next generation to thrive.

“Nothing could be more fundamental to that than reading. And yet digital publications are subject to VAT. That can’t be right. So today I am abolishing the reading tax. From 1 Dec, just in time for Christmas, books, newspapers, magazines or academic journals, however they are read, will have no VAT charge whatsoever.”

Responding to the announcement, the NMA said: “The NMA has campaigned for many years for VAT zero rating to be applied to news media publications in all their forms so we welcome the Chancellor’s announcement today.

“We look forward to seeing more detail on the scheme but it is vital that the VAT zero rating is applied to all the various digital platforms through which news media journalism is distributed.

The NMA notes that figures published by the Treasury project the measure to be worth £810 million over five years.

In addition, it says, the Government announced the establishment of a digital markets taskforce to provide expert advice on the functions, processes and powers that may be needed to deliver on the Government’s objectives in the digital markets. The taskforce will publish a final report in September that will contain advice on a range of issues including the form of a code of conduct to promote competition, the powers needed to enforce it, and advice on where a pro-competitive regime might interact with existing regulatory regimes.

The NMA notes that the Budget also included the digital services tax, which will apply to businesses that provide a social media service, search engine or an online marketplace to UK users. These businesses will be liable to pay a digital services tax when the group’s worldwide revenues from these digital activities are more than £500 million and more than £25 million of these revenues are derived from UK users. If the group’s revenues exceed these thresholds, its revenues derived from UK users will be taxed at a rate of 2%. To read the NMA’s press release in full, click here