Charity advertising VAT: which digital channels are zero rated

By Hussein Bhaiji FCCA CTA, Managing Partner. Last reviewed: October 2026.

Your charity has just approved a £50,000 digital campaign, which becomes £60,000 if every element carries VAT. In practice some of it will be zero rated and some will carry 20%, and the difference is not about how much you spend. It is about how the advertising finds its audience. So which digital channels qualify for the charity advertising VAT zero rate, and which ones cost you an extra 20%?

What is the charity advertising zero rate?

Advertising supplied to a charity can be zero rated under Group 15 of Schedule 8 to the VAT Act 1994, Items 8 to 8C. The relief covers:

• The right to place an advertisement in a medium of communication with the public
• The actual placing of that advertisement
• Design and production of the advertisement
• Goods closely related to that design and production

Two conditions matter. The supply must come from a third party, which can include the charity’s own separately VAT-registered trading subsidiary, rather than being done in-house. And it must be made to the charity itself, not to its trading subsidiary.

The content is irrelevant. Fundraising appeals, awareness campaigns and staff recruitment adverts all qualify equally.

What is the selected media exclusion?

The relief applies to advertising aimed at the general public. It is withdrawn where the members of the public who see it are selected by or on behalf of the charity, including selection by postal address, telephone number or email address, and including selection at random.

So direct mail, telesales and email marketing all fall outside the relief, because each one reaches a person the charity picked.

Two further exclusions are worth knowing. Anything that goes into building the charity’s own website is excluded, because you are not buying someone else’s space. And where the charity designs an advert in-house, the design work has no VAT relief, because there is no third-party supply of design, and goods or services the charity buys to do that work itself are excluded by Note (10C). Buying space or airtime to run that advert can still be zero rated.

Which digital channels are zero rated?

HMRC reviewed digital advertising in 2020 and accepted that some, though not all, of it qualifies. Its current published position treats the following as zero rated, provided all the other conditions are met:

• Audience targeting
• Behavioural targeting, including using cookies to show adverts to people who previously visited a website
• Channel targeting
• Content targeting
• Daypart targeting
• Demographic targeting
• Device targeting
• Direct placements on third-party websites
• Location targeting, where individuals have opted to share location data that is then aggregated
• Lookalike targeting
• Pay-per-click (PPC) advertising, including sponsored search links
• Retargeting

Two entries on that list are often missed. Behavioural targeting and retargeting both follow individuals around the internet using cookies, and yet HMRC accepts them.

Which digital channels are standard rated?

HMRC lists three categories, and we split the third into two because it is the one that catches most charities.

Social media advertising (Facebook, Instagram, LinkedIn, TikTok). HMRC’s position is that where individuals log into their personal pages, the platform applies advertising to them based on personal interests and location data it holds about that individual. That makes it selected media, and it is standard rated.

Most of the large platforms bill UK advertisers from outside the UK, so the invoice often shows no VAT at all. That does not mean the advertising is zero rated. If your charity carries on any business activity or is VAT registered, it must account for the VAT itself under the reverse charge in section 8 of the VAT Act 1994, and for most charities that VAT cannot be fully recovered. The value of those services also counts towards the £90,000 VAT registration threshold.

Email advertising. Adverts sent to email addresses are targeted at the individual recipient.

Subscription websites. Advertising served to someone logged into a subscription site is treated the same way as social media, and for the same reason: it is applied to an identified individual while they are signed in to their account.

Natural hits. A charity appearing in organic search results is not advertising at all, so there is nothing to zero rate. Related to that, copywriting and design services supplied for search engine optimisation purposes do not qualify either, even though design work for a qualifying advertisement does.

When HMRC changed its view in 2020, it allowed suppliers to correct VAT overcharged in the previous four years, and HMRC can assess VAT under-declared over the same period. That is why it is worth reviewing the last four years of advertising spend. The rules are in Schedule 8 to the VAT Act 1994 (Group 15, Items 8 to 8C), with the selection test in Note (10A), the charity’s own website exclusion in Note (10B) and the in-house design exclusion in Note (10C). HMRC first set out its position on digital channels in Revenue and Customs Brief 13 (2020). That Brief is no longer published as a separate document on GOV.UK, and HMRC’s current position is in its VAT Charities Manual at VCHAR5000 and in paragraph 3.7 of VAT Notice 701/58.

Why does the line fall where it does?

HMRC distinguishes between advertising that selects a broad audience by criteria and advertising that reaches an individual personally, while they are signed in to their own account, or at their own postal or email address.

Behavioural targeting builds a segment of people who behaved a certain way, then advertises to that segment. Social media advertising is applied to an identified person while they are signed in, using the likes, interests and location data the platform holds about them. In our reading of HMRC’s guidance, that is the difference between advertising to the public and advertising to selected individuals, even though both feel targeted to whoever is paying.

What should you do next?

Ask your agency to split the invoice. A single line reading “digital campaign” gives you no basis for treating any of it as zero rated. The invoice should show each channel and the agency’s own fee separately. If the agency buys the space in its own name and sells it on to you, its charge for qualifying space and production can be zero rated. If it buys the space as your agent, that space can be zero rated but the agency’s fee or commission carries 20% (VAT Notice 701/58, paragraph 4.4). If you are an agency invoicing charities, our accountants for advertising and marketing agencies page explains how we help.

Check who the supply is made to. If your trading subsidiary is the customer, commissioning and paying for the advertising, the relief is lost even if everything else is right, and re-addressing the invoice to the charity does not fix that. The charity must contract for the advertising and pay for it.

Give your supplier a declaration. HMRC recommends that the charity gives each advertising supplier a written eligibility declaration that the conditions for zero rating are met, with evidence that it is a charity. HMRC publishes a sample form in VAT Notice 701/58, paragraph 10.5.

Review the last four years. If social media has been treated as zero rated, if overseas platform invoices have not been reverse charged, or if paid search has been charged at 20%, there is an exposure or a refund sitting there. Both are worth quantifying, and our VAT advisory work for charities covers both.

Most accountants will not raise this, because it never appears in the accounts as a problem. We look because we are Chartered Certified Accountants and Chartered Tax Advisers, and a charity paying unnecessary irrecoverable VAT is losing money it can never earn back.

If your charity spends meaningfully on advertising, book a conversation with a Chartered Tax Adviser. There is more on our Charities and Not-for-Profits page, and a real case where an agency’s charity advertising was split out and zero rated in our creative industries case studies.

Charity advertising VAT: frequently asked questions

Is Google Ads advertising zero rated for charities?

Search campaigns, which are pay-per-click advertising, can be zero rated provided the other conditions are met. A Google Ads account can also run YouTube and Gmail campaigns, which are shown to signed-in users, so check each campaign type against HMRC’s standard-rated categories rather than treating the whole account as zero rated.

Is Facebook advertising zero rated for charities?

No. HMRC treats adverts shown to signed-in users of social media as selected, so they are standard rated. Where the platform bills from outside the UK and charges no UK VAT, a charity that is VAT registered or carries on any business activity must account for the VAT itself under the reverse charge.

What declaration does a charity give its supplier?

A written declaration that the conditions for zero rating are met, together with evidence that it is a charity. HMRC’s sample form, ‘Charity advertising request for zero rating’, is at paragraph 10.5 of VAT Notice 701/58.

Can a charity reclaim VAT wrongly charged on advertising?

Not from HMRC directly. The charity asks its supplier to correct the invoices. The supplier can then claim the overcharged VAT from HMRC under section 80 of the VAT Act 1994, within four years, and must pass the refund on to the charity, normally within 90 days. If the charity recovered any of that VAT on its own VAT returns, it must reverse that recovery.