Changes to digital advertising VAT rates for charities

Following a campaign by the Charity Tax Group, HMRC agreed to change their policy on VAT rates applicable to digital advertising back in September 2020.

Below is a summary of the applicable VAT rates as they stand following those changes. The items listed in bold indicate a change in the rate was made. We hope you will find this a useful reference resource.

VAT rates for digital advertising:

The tables below show the VAT rate previously advised by HMRC and the new revised VAT rate.

Advertising TypeDescriptionPreviously Advised VAT RateUpdated VAT Rate
Pay per Click advertsThese are advertisements and not involving selection on address.Zero rateZero rate
Natural HitsNot supplies of advertising.Standard rateStandard rate
Direct placements on third party websitesThese are advertisements and not involving selection on address.Zero rateZero rate
Social mediaAdvertising is specifically targeted at the individual.Standard rateStandard rate
Retargeting individuals revisiting a websiteThe IP address of the individual is recorded and advertising is presented based on the users prior searches.Standard rateZero rate

Other targeted advertising:

Channel targetingA particular section/page of a website used to advertise.Zero rateZero rate
Content targetingAdverts displayed alongside related content.Zero rateZero rate
Behavioural targetingSimilar to retargeting – adverts displayed based on prior websites visited based on IP address.Standard rateZero rate
Demographic targetingUsing sources of data on the targeted individual to base the advertisements on.Standard rateZero rate
Audience targetingSimilar use of information as demographic targeting but on a group of individuals. This will still be based on their IP addresses and direct contact.Standard rateZero rate
Location targetingIP addresses used to target individuals in a particular area.Standard rateZero rate
Lookalike targetingCookies used to identify potential new customers by reviewing current customers, advertiser then directly targets the potential new clients. Standard rateZero rate
Device targetingExample is an advertiser choosing certain devices to advertise to, not targeting specific individuals.Zero rateZero rate
Daypart targetingAdvertising at specific times of day or specific days of the week. Not a targeted selection of individuals.Zero rateZero rate

Further guidance on these VAT rates can be found on the website.

Find out more

If you would like further advice or guidance regarding how this will affect your organisation and what you should do, please contact a member of our specialist Charities team on 01903 234094.