Charities to benefit from HMRC’s changed stance on digital advertising relief for VAT

Some charities may now be able to claim back overpaid VAT on digital advertising, after HMRC has published a brief on charity digital advertising relief from VAT confirming that only:

  • advertisements sent to email addresses;
  • the listing of a charity in a search engine’s results (which is not considered advertising for the purposes of VAT relief); and
  • social media and subscription website advertising

are now considered standard rated for VAT purposes.

The categories now zero rated, in summary, are: audience targeting, behavioural targeting, channel targeting, content targeting, daypart targeting, demographic targeting, device targeting, direct placements on third party websites, location targeting, lookalike targeting, pay-per-click adverts, and retargeting. 

Generally, as long as the advertisement being published qualifies for the zero rate, the copyright, design and production services will also qualify.

Any charities that think they have overpaid VAT on digital advertising should seek professional advice. They will now have 4 years to reclaim any overpayment, but it would be prudent not to leave this until the last minute.

Previously, HMRC had ruled that VAT was due on most forms of digital advertising, which has cost charities millions of pounds of irrecoverable VAT. It has only now changed its position in response to three years of campaigning by the Charity Tax Group.

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