Tax on books is a terrible thing - especially when it's a full 20 percent.
No matter what you think of progressive and regressive taxes, £1 tax on a £5 book is excessive.
Fortunately, we don't pay tax on paper books, but it is a different matter when it comes to Ebooks. Apparently they are treated as computer games - hmm!
Ebooks are not cheap to produce. Editing and typesetting must still take place and then they have to be 'converted' to ePub. I'm not exactly sure what this process involves - but it is done by the page and is expensive. 
Thankfully, once an Ebook is created it can be reproduced millions of times - unlike paper books where every book requires paper and printing. But an Ebook title needs to sell thousands of copies before the publisher will redeem any investment - large percentages of the retail price go to the distributor, retailer and let's not forget the author.

However, we want to do our little part for Ebook marketing. As a result, we have reduced all our titles to £3.99 plus tax - this keeps costs to under £5.
We try to do our best.