PPA Calls on Chancellor to cut Digital VAT in Budget

The PPA has this week called on Phillip Hammond to cut what it describes as the “digital reading tax” in his Budget later this month.

PPA Calls on Chancellor to cut Digital VAT in Budget

While printed magazines, periodicals books and newspapers attract a zero-rate of VAT, digital editions are subject to the full 20% standard rate. Until recently, the UK has been prohibited from extending the zero-rate to digital editions by EU law – which has handcuffed policy makers, says the PPA. However, on October 2, EU Finance Ministers adopted a Council Directive amending VAT rules regarding rates of value added tax applied to books, newspapers and periodicals and granting Member States the freedom to align reduced rates for print and digital publications.

PPA Managing Director, Owen Meredith commented: “For years the PPA has been calling for the Chancellor to act to end this tax anomaly which penalises digital consumers and discourages innovation and investment in the digital economy. Now the EU has finally acted, UK Ministers are free to modernise VAT rules and correct this injustice. In our Budget Submission we have called on the Chancellor to use his October 29 Budget to take advantage of the new rules and finally end the tax on reading.”

Since the introduction of Value Added Tax in 1973, magazines, periodicals, newspapers and books have been subject to a zero rate, recognising the value of reading and journalism to civic society, this, says the PPA, ensures VAT does not act as a disincentive to reading.

Owen added: “Publishers are reaching larger audiences than ever with cross-platform distribution, and growing digital audiences hungry for trusted, quality content. However, monetising those audiences in the digital landscape remains challenging, and this is further hampered by a punitive tax regime that adds a price premium of 20% VAT to digital content. Now is the time for the Chancellor to act.”