Tax on literature

wymondham

Hi All

We got a Kindle for xmas and just wondered why normal books are tax exempt, but e-books are taxed at 20% for identical content? Does anyone know?

ILW

Because they are not books, they are a service. There is a fairly tight definition of what a book is in the HMRC rules.

vivatifosi

This has long been the case. Books and newsprint are zero rated, but anything that came on a floppy disk or CD-Rom was also taxed long before the Kindle came along. I'm guessing here, but could it be because electronic data and media have always been vatable?

pinkteapot

ILW is right. HMRC's definitions don't quite work these days. Products must be tangible. Anything electronic is a service. I think they consider ebooks "electronic guides" or something. Seems a bit ridiculous but there we go.

Govt isn't going to change its stance any time soon:
http://www.thebookseller.com/news/uk-government-holds-firm-e-book-vat.html

wymondham

How silly, and entirely predictable I suppose in order increase VAT revenue. Changing VAT rules depending on how content is delivered is tad obsurd, especially as e-books are more environmentally friendly:

No paper, so no tree's cut (or the need to recycle paper)
No CO2 in delivering to your home

The only thing I would say is if I ran out of toilet paper I'd rather have an old book to hand than a Kindle!

ILW

Cutting down trees , making paper, printing etc does keep a lot of people in jobs.

vivatifosi

ILW wrote: »

Cutting down trees , making paper, printing etc does keep a lot of people in jobs.

And keeps people like me in libraries;).

System

wymondham wrote: »

How silly, and entirely predictable I suppose in order increase VAT revenue.

But they are not increasing revenue. They are just not changing the rules.

Ebooks have been around long before the 'invention' of Kindle, Kobo etc and have been VAT rated from day one because they do not meet HMRC definition for zero rating.

Road_Hog

wymondham wrote: »

How silly, and entirely predictable I suppose in order increase VAT revenue.

I doubt anything new these days comes zero VAT rated. And as electronic versions of print become more popular, the VAT take will rise to probably close to 100% as less paper printed literature (look at newspaper circulation plumetting). And they can always put an environmentally friendly 'green' tax on paper to help speed up the change.

As easier to introduce a new tax than it is to pull something zero VAT in the VAT chargeable category.

Ilya_Ilyich

As others have mentioned when you pay for an ebook you're not actually buying an item. A book is a physical item, an ebook is (generally) a license to read a work for as long as the seller allows you. You don't really own anything.