On 30 April the Government announced two VAT rate changes from standard rate to zero rate, for digital publications and personal protective equipment (PPE), both to take effect from 1 May 2020.
The rate change for digital publications was due to apply from 1 December 2020, as announced in the March 2020 Budget, timed so subscriptions taken out as Christmas presents would qualify for the lower rate.
However, during this coronavirus lockdown sales of physical newspapers and magazines have plummeted, while students are having to use digital materials to continue their studies. The Government has therefore decided to lower the VAT rate immediately.
Publishers may have missed this change in the middle of the other chaos, so check that your clients have changed their systems to account for the correct VAT rate from 1 May 2020. Pricing policies may also need to be reviewed.
Clubs and societies which distribute a physical magazine will also benefit as currently they need to apportion part of their membership subscriptions to the zero-rated magazine. Now they will not be penalised by switching to 100% digital publications.
The change in VAT rate for PPE is only temporary; it applies for sales made between 1 May 2020 and 31 July 2020 inclusive. Where businesses have recently started to produce say hospital gowns or face masks, check that VAT has been correctly accounted for.