VCHAR5000 - Advertising
Source: gov.uk (2025-10-16)


The supply of advertising by a charity is normally taxable at the standard rate. However there are some exceptions to this rule which are set out in Notice 701/1 (HMRC website) (https://www.gov.uk/government/publications/vat-notice-7011-charities) How VAT affects charities.

One exception is the sale of advertising space to a charity, by a third party. This can be treated as zero rated ifthe advertising is aimed at the general public. For details see Notice 701/58 (HMRC Website) (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000123&propertyType=document) Goods or services supplied to charities.

Advertising via digital mediums

Advertisements supplied by digital methods have the potential to fall within the zero rate. However, digital advertising services feature a level of targeted selection of an audience that can make it difficult to determine if the zero rate can apply. In 2020, HMRC reviewed a range of digital advertising situations and accepted that some, though not all of those considered, are eligible for the zero rate:

Standard rated

Email advertisement: advertisements sent to email addresses are targeted at the individual recipient and are therefore excluded from zero rating.

Natural hits: the listing of a charity in the results of a search engine. This happens automatically, regardless of any action taken by or on behalf of the charity, and simply highlights text from the charity’s website. Such results are not considered advertisements for the purposes of the relief.

Social media and subscription website accounts: when individuals log-in to their personal pages, sites use tools to apply advertisements to them when they are signed in. The content will be related to the individual’s known likes, dislikes, interests or location, as a signed-in member of the website. This includes Facebook and other similar sites.

Zero rated subject to all other conditions being met

Audience targeting: the use of demographic, behavioural and other third-party data to identify a target audience and placing advertisements related to that data as they browse elsewhere.

Behavioural targeting: using cookies to identify people who have visited websites or made searches related to particular areas of interest and placing advertisements for related goods and services which are displayed as they browse elsewhere.

Channel targeting: the selection of a specific section of a website on which to place advertisements.

Content targeting: selection of specific content for advertisements to appear alongside.

Daypart targeting: advertisers choose to target only specific times of day or specific days of the week, without any decisions involving recipients. This is because their advertisements are more relevant to those periods.

Demographic targeting: use of data from a number of sources, including logged in and behavioural data, to identify target audiences. The advertisements will be related to that data as the audience browses elsewhere.

Device targeting: advertisers choose to reach only certain types of device.

Direct placements on third party websites: placing an advertisement on a website without any decisions involving recipients. The choice of website is the main consideration.

Location targeting: similar to behavioural targeting. When individuals opt to provide location data, that information is collated and combined int large datasets to target audiences who have visited particular areas. Advertisements relating to that data are then displayed as the audience browses elsewhere. No personal data or survey results are collated.

Lookalike targeting: using cookies to identify potential new customers by looking at common traits and behaviours of existing customers.

Pay-per click advertising: used to encourage people to click on an organisation’s link in precedence to other links shown. The search engine receives a fee every time the organisation’s website is accessed through the sponsored link.
- Retargeting: use of cookies to track users and find them again when they browse the internet.
Generally, as long as the advertisement being published qualifies for the zero rate, the copyright, design and production services will also qualify. However, services supplied by copywriters and designers for the purposes of search engine optimisation, structuring a website so that it contains as many keywords as possible, do not qualify for the zero rate. These services involve the optimisation of a charity’s own website and are specifically excluded from the relief.