VAT on audiobooks

A debate on VAT on audiobooks is to be held in Westminster Hall on 15 June 2023 at 3pm. The subject has been chosen by the Backbench Business Committee, and the debate was requested by Sir Mike Penning MP. The debate will last 90 minutes.

VAT is charged on the supply of goods and services in the course of business by a taxable person. VAT is mostly charged on goods and services at the basic rate (20%), although there is a limited use of a zero rate (0%) or a reduced rate (5%). Some goods and services are exempted from VAT altogether.

The Office for Budget Responsibility has forecast that VAT will raise over £160 billion in 2023/24. Only income tax and National Insurance contributions are forecast to raise equivalent sums.

European Union VAT law limited Member States’ discretion in setting lower VAT rates on individual goods and services. Since the UK left the European Union (EU), the UK Government has introduced a new VAT zero-rate on women’s sanitary products in January 2020, on electronic books in May 2020, and on solar panels and other energy-saving materials in April 2022.

Currently, audiobooks are liable for VAT at the standard rate (20%). Conversely, physical books and e-books are zero-rated for VAT purposes.

When e-books, but not audiobooks, were zero-rated in 2020, HM Revenue and Customs (HMRC) explained that the extension of the relief aimed to only apply to “the supply of electronic versions of books already zero rated in UK law.” The Government confirmed this in answer to Parliamentary Questions, where the Government stated that audiobooks, whether digital or physical, were already being taxed consistently at the standard rate.

The Publishers Association, an industry leading body, has campaigned for a number of years to remove VAT from audiobooks. Their campaign, Axe the Reading Tax, has gathered the support of Members of Parliament as well as other organisations, such as the National Literacy Trust and the Royal National Institute for the Blind.

Research obtained via the European Centre for Parliamentary and Documentation shows that several countries have introduced VAT reductions or reliefs for audiobooks, bringing them in line with the treatment of physical books.