There are three rates of VAT applicable to sales in the UK: standard 20%, reduced 5% and zero 0%.

Products and services are very rarely switched between different rates but on 1 May 2020 digital publications and personal protective equipment were switched from standard to zero rate VAT with immediate effect.

Digital publications

The sale of physical books, newspapers, newsletters and magazines has always been zero-rated but the digital versions of the same products were standard-rated. In the Budget on 11 March the Chancellor announced that digital publications would be zero-rated from 1 December 2020 but that rate change has been brought forward to 1 May 2020. The zero rate for digital publications includes online subscriptions for newspapers and magazines as well as e-books but it does not cover audiobooks, film or music download services. Strangely the sale of digital versions of sheet music is not covered by the zero rate either. You may have missed this change in the midst of other COVID-19 related chaos, so check that your invoicing system has been adjusted for any digital publications that you sell. Clubs and societies should also review their policies regarding distribution of physical or electronic membership magazines.

PPE

Personal protective equipment (PPE) as defined by Public Health England is zero-rated for sales made between 1 May 2020 and 31 July 2020 inclusive. This is to help care homes and other businesses who need to buy PPE but cannot reclaim the VAT.

If your business has recently begun to produce protective equipment such as hospital gowns or face masks, check that VAT has been correctly accounted for.

Last updated: April 29th 2021.