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VAT on e-books zero rated from today. But not all will benefit

VAT on e-books - zero rated from today. But not all will benefit

The zero rating of e-books is welcome at time when more people are reading on line, but not all e-publications will benefit, say leading tax and advisory firm Blick Rothenberg.

Alan Pearce, VAT partner at the firm said: “This has been brought forward due to the outbreak of the Coronavirus pandemic and the current lockdown requiring people to stay at home.

“The zero rating of e-books, which was originally planned to take effect from 1 December 2020, has been brought forward to today so that there is a reduced cost to access online publications at a time when many people are confined to their homes and schools and libraries are closed.”

Antje Forbirch, VAT Director at the firm said: “This alignment of the VAT treatment for physical and digital publications will be welcome news for publishers and consumers, provided the VAT saving is passed on to the end consumer.

“However, suppliers will need to review their offering as not all e-publications will benefit from the zero rate. E-publications that are predominantly (i.e. more than half) devoted to advertising or contain audio and or video content, and audiobooks themselves, will remain subject to the 20% rate of VAT.”

Alan stressed: “Suppliers will need to quickly adjust their VAT accounting systems. Furthermore, where subscription services for e-books have been invoiced in advance and VAT has already been paid upfront, HMRC will allow suppliers to issue credit notes and refund the VAT to consumers for the proportion of the annual subscription that runs beyond 1 May 2020.”

Contact us

If you would like to discuss any of the above or have other queries about how you can make the right decisions for the future of your business and your income, please contact your usual Blick Rothenberg contact or one of the partners whose details are to the right.

You can also visit our Coronavirus – Practical Guidance for businesses today Hub for our latest updates and insights.

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