UK Vat zero Rating for Books

The UK Value Added Tax (VAT) has a special zero rating for sales of books. This means that no VAT is charged on books and textbooks.

The VAT is the United Kingdom’s consumption and sales tax. The standard headline rate is 20% as of 2011 (17.5% in 2010), but not all sales see this full rate applied. Instead, Revenue & Customs implements several means of reducing VAT on certain types of goods and services. These include reduced VAT rates (for items like home heating fuel), exemption schemes (like the health care services scheme, the second-hand goods scheme and the tour operators’ scheme), and the zero rating. Technically, a zero rating does not mean that an item is non-taxable – it just means that the government has set the tax rate at 0%. Of course, from the perspective of the consumer, this amounts to the same thing.

Revenue & Customs sets out the specific rules for the books zero rating in Notice 701/10. Basically, bound books are zero-rated, whether they are literature (fiction), textbooks and references, textbooks, and so on. The government extends the same zero rating to other materials under certain circumstances. Brochures and pamphlets are said to be zero-rated (in frustratingly-vague terms) if they “contain information, and contain a substantial amount of text.” Newspapers, magazines and journals, sheet music, and maps are all zero-rated.

The zero rating does not apply for certain specialized publications. These include blueprint and drafting materials (e.g. in architecture or in engineering), albums produced for stamps and other collectors’ purposes, blank stationery and address books, and so on. Forms and books are said to contain insufficient text if more than 25% of the paper space is either blank or consists of blank forms to be filled out by the reader or user. Other items listed at standard rates by Revenue & Customs (meaning the full VAT rate must be charged) include posters and photocopies (including photocopies of items which would be zero-rated in their original format). 

If you are (or are considering becoming) a bookseller, and are curious about the implications of VAT for your business, you should discuss the matter with a qualified professional, such as an accountant or a tax lawyer, in order to better understand your tax obligations. There is a large grey area with respect to the book zero rating, although the list of examples provided by Revenue & Customs should be of some assistance. According to this list, blank account books are standard-rated, but filled account books are zero-rated; address books and calendars are standard-rated, but catalogues and colouring books are zero-rated; and so on.