News & Opinion

Abolition of 'reading tax' good news for news brands

The Treasury’s plans to scrap VAT on digital publications brings digital publishing into line with print.

Among the big budget headlines from the Chancellor’s speech on Wednesday, there was some good news for news brands. Digital publications will be exempt from VAT as of December, including digital newspapers.

20% VAT is currently levied on digital versions of newspapers, books, magazines, and academic journals, labelled by some as a ‘reading tax’. The Treasury’s proposals will bring the digital publication industry into line with the print publication industry, which already enjoys exemption from sales taxes.

Speaking in the House of Commons, the Chancellor of the Exchequer Rishi Sunak declared: “From the first of December, just in time for Christmas, books, newspapers, magazines, and academic journals, however they are read, will have no VAT charge whatsoever.”

The Chancellor added, in a quip to the opposition benches, that titles included in the exemption would be “works of fantasy like John McDonnell’s Economics for the Many”.

The abolition comes in the wake of sustained campaigning by industry leaders. In 2019, the head of the News Media Association, along with other publishing organisations signed a joint letter to then Chancellor Phillip Hammond that called for the abolition of a tax system ‘anomaly’.

In reaction to yesterday’s news, the NMA welcomed the decision, but implored the government to push the definition beyond “e-newspapers”. A spokesman stated: “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.”

Meanwhile, a spokesman for the Guardian Media Group commented that: “The abolition of VAT on digital news publications is welcome, recognising the shifting reader habits and commercial changes that news organisations are navigating. For quality news organisations, including The Guardian, who are earning more revenue directly from readers, today’s move is a positive step forward.”

by Lewis Boulton 12/03/20

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