Who’d have thought three little letters could cause such confusion? VAT, or Value Added Tax, is a tax paid by retailers nearly every time they make a sale, including print sales! So, it’s a good idea to be aware of how VAT applies to your goods.
Now, we can’t fit in everything there is to know about VAT into one blog. There’s just too much! But we’d like to talk through the main points that affect printers. Please note that this is a guide only and, for more details or for information on non-print items, you should see the government’s official legislation.
Zero-Rated Print Products
You’ll be pleased to hear that many print items are actually zero-rated! Being zero-rated is not quite the same as being VAT exempt. You still have to register the sale and log the amount of VAT. However, when the VAT has been set at 0%, there’s nothing for you to actually pay.
The items officially listed as zero-rated VAT print products are as follows;
- 1. Books, booklets, brochures, pamphlets and leaflets.
- 2. Newspapers, journals and periodicals.
- 3. Children’s picture books and painting books.
- 4. Music (printed, duplicated or manuscript).
- 5. Maps, charts and topographical plans.
- 6. Covers, cases and other articles supplied with items 1 to 5 and not separately accounted for.
Some of these are pretty straightforward. For the main items though, we’ve included a more detailed description for you here…
Books & Booklets
Books are defined as anything of substantial reading matter bound between covers of a thicker material. These can be printed, typed, photocopied, or even handwritten and will still count as zero-rated. This category also includes bound collections of letters; loose-leaf books (which may be presented in a temporary binder); and amendments to loose-leaf books.
Exceptions include books of technical plans; collection albums (e.g. stamps) that are not made up of at least 75% reading material; and stationery items like diaries and address books.
Brochures & Pamphlets
These are identified as multiple sheets of paper fastened or folded together but not necessarily bound. They can contain advertising material or can be purely informative in nature. Single sheet folded brochures can also be zero-rated, as long as they contain a substantial amount of informative text and are not designed to hold other items.
Leaflets can be a little tricky to make sure they count as a zero-rated item. In order to class as a leaflet, your print must be a single sheet of paper that meets the following criteria…
- 1. No bigger than A4 finished (can go up to A2 flat but must be folded to be smaller than A4).
- 2. Designed for short-term use – printed on low-weight stock and without laminations or other finishes that suggest it could be kept for longer.
- 3. Intended for mass distribution with a minimum of 50 copies supplied.
- 4. Designed to be held by hand rather than mounted for general display.
- 5. Designed for no other purpose than to inform.
- 6. Supplied on their own, not as part of a larger print bundle.
Pay particular attention to point number 5 as this is where it’s easy to get tripped up. Your leaflet will become vatable if people can use it to get something. For example, if your leaflet promises “free entry with this leaflet”, or “25% off with this leaflet”.
Leaflets with Forms
Some leaflets or brochures include small forms – “areas for completion” – or sections to detach and return to the company. These kinds of leaflets may still be zero-rated as long as the area for completion/detachment is no more than 25% of the total product.
Vatable Print Items
Supplying other printed products is likely to require VAT. If you can’t find a way for your work to fit into one of the above categories, it will be standard rated – 20%.
We just want to draw attention to two areas that, from experience, we’ve found are likely to catch people out;
Posters can sometimes be seen as similar to leaflets. However, as a general rule, anything A3 or bigger will be classed as a poster and you will need to pay VAT. If fewer than 50 are supplied, A4s will also count as posters because the order size doesn’t imply mass distribution.
On a similar front, certificates could be deemed as a kind of leaflet; they’re single sheets of paper, usually small that A4, don’t require more than 25% of the design to be filled in etc… However, certificates are designed to be kept and so these, too, are disqualified from zero-rating.
Turning Standard Rating into Zero-Rating
If a product you regularly produce wasn’t listed in the zero-rated section, fear not! There may be hope yet as there are some cases when typically standard rated products can become zero-rated. Here are just a couple…
On their own, letters do not qualify for zero-rating unless they’re in permanently bound collections. But they might also be zero rated if the letter is more of an incomplete template. An example would be a stock welcome letter perhaps, for which the details are completed on an individual need basis.
In this form, a letter might qualify as a leaflet as long as the incomplete section requires no more than the recipient’s name and address, a reference number, and a signature.
Print items that are not normally zero-rated may suddenly become zero-rated when supplied to a charity. This is covered by a whole new section of VAT legislation so, for more information, please see the official government guidance.
That about sums it up for printed items with VAT. There are a few more considerations you might be interested in that we didn’t get to cover today. If we didn’t answer your questions here, please take a look at the official government guidance on print VAT and related services.