Industry Voices

Owen Meredith | Managing Director | PPA

By Jess Browne-Swinburne

18 Mar 2020

A lesson we learnt last week was that when we all pull together as an industry we can achieve great things. Later this year, we look forward to the axing of a digital reading tax, as Rishi Sunak announced in his March 2020 Budget. ​​​​​​​I spoke with Owen Meredith, PPA MD, who charts the success of our #AxeTheReadingTax campaign and what this now means for publishers in the UK.

*What is the digital reading tax and how does it affect publishers? *

Ever since VAT was introduced in the UK in the 1970s, magazines, newspaper, books and journals have been zero-rated for VAT recognising their great societal value. We’ve been in a mad position that as technology has developed, publishers innovated, and reading habits changed, the digital editions of those same publications (and their digital native equivalents) have been subject to standard rate VAT.

What was the aim of the #AxeTheReadingTax campaign?

We had a pretty straight forward aim, to deliver equal tax treatment to our members content, no matter what platform it was delivered on – print or digital. Readers enjoying great content don’t distinguish between ink or pixels, and nor should the taxman! I’ve been working on the campaign since I joined the PPA in 2014 and I’m delighted we’ve got here in the end! Of course, digital content comes in many formats and we have been working with the Treasury to ensure these new rules don’t discriminate against different forms of content delivery or different types of published content and work to promote innovation in paid content models too.

Chart the journey of the #AxeTheReadingTax campaign from the start to now.

In part, the reason the tax had applied in the UK was because of the European VAT Directive, which governs rules on how Member States in the EU apply VAT to ensure fair competition in the single market. We successfully worked with counterparts across the EU to deliver a change to those rules back in 2018 and from there our attention moved to the UK Treasury, who had a new freedom to match print and digital rates at zero. We started pushing hard ahead of the 2018 Budget with a campaign backed with letters in national newspapers and across the media. Notably, the Cairncross Review into the long term sustainability of journalism backed our call in 2019, with the Government promising some action in their formal response earlier this year. Thankfully, this action was taken in the Budget last week, and from December 1 digital publications will be zero-rated.

Why has it taken many years of lobbying for the government to finally #AxeTheReadingTax?

Asking the Treasury for money is never an easy task! We had to build a body of evidence to support our case, create a compelling narrative, and then find the political opportunity. When those element comes together, and the industry acts with a single, clear voice about our ask, we can deliver things that may have seemed impossible just a few years ago.

What immediate effects will publishers now see from the zero-rating of digital publications?

From December 1 this year, publishers and e-retailers will no longer have to apply 20% VAT to digital editions. This means a less complex system, so no more apportioning for bundles subs! IT can deliver better value to consumers and money to publishers to invest in journalism and new products. Plus, the space to innovate for create new models of reader revenue in the digital landscape, for example micropayments.

What does this announcement mean for those seeking to engage with HMRC following the News UK tribunal ruling?

This case rested on some very specific points about the nature of the News UK digital editions. HMRC has applied to appeal the case to the Court of Appeal. It is likely a final decision in this case could still take some time. Publishers should take advice on whether they might have a claim, in the event the judgement is upheld, and should consider lodging a protective claim if they believe they do. We recently ran a seminar with Deloitte to discuss this in greater detail and advice publishers on potential action. Anyone seeking more information should contact my colleague Amy Owens.


Related articles