Printed matter – VAT zero rating

Certain supplies of printed matter are zero rated. This is a general concession which is available to all VAT registered entities, not just charities. Typical goods include books, booklets, brochures, pamphlets and leaflets, newspapers, journals, and periodicals.

Covers, cases and other articles supplied with these zero-rated items, and not separately accounted for, are also zero rated. Minor accessories (e.g. dust covers, clasps, book marks and presentation cases) supplied with any zero-rated item are usually regarded as forming part of the zero-rated item.

HMRC VAT Notice 701/10 was updated in June 2015 to clarify the circumstances when a business can zero rate books and other forms of printed matter.

Zero rating is restricted to goods produced on paper and similar materials such as card. Most items qualifying for zero rating will be products of the printing industry (including items printed in Braille); but goods which are photocopied, typed or hand-written will in some cases also qualify.

Goods containing text in other formats such as audio or video cassettes or CDRoms are standard-rated. This includes the storage and distribution of text by fax, e-mail, microfiche, or any similar process. Transcripts or printouts made of such information are zero-rated if they are supplied in the form of books, booklets, brochures, pamphlets or leaflets.

The supply of text by electronic transmission (including e-books), via the Internet or similar means, is also standard rated. Such supplies are of services, not of goods; and different VAT rules will apply to them.

A surcharge imposed for handling a small order is treated as part of the price of the goods and is zero-rated if the goods are zero rated.

There are three possible liability outcomes where zero-rated printed matter is supplied with other standard-rated items:

  • the standard-rated item may be ancillary to, or an integral part of, the supply of zero-rated printed matter, in which case there is a single zero-rated supply
  • the zero-rated printed matter may be ancillary to, or an integral part of, the supply of the standard-rated item (e.g. an instruction booklet provided with a new washing machine), in which case there is a single standard-rated supply
  • there may be a multiple supply where two or more items are distinct and independent. If the items are sold for a single price and are liable to different rates of VAT, the supplier must apportion the price (subject to the ‘package test’).

Notice 701/10 outlines the so-called ‘package test’, which describes which items sent out in direct-mail packages attract VAT and includes specific provisions for charities.

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