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 Type | Description | Previously Advised VAT Rate | Updated VAT Rate |
| Pay per Click adverts | These are advertisements and not involving selection on address. | Zero rate | Zero rate |
| Natural Hits | Not supplies of advertising. | Standard rate | Standard rate |
| Direct placements on third party websites | These are advertisements and not involving selection on address. | Zero rate | Zero rate |
| Social media | Advertising is specifically targeted at the individual. | Standard rate | Standard rate |
| Retargeting individuals revisiting a website | The IP address of the individual is recorded and advertising is presented based on the users prior searches. | Standard rate | Zero rate |
Other targeted advertising:
| Channel targeting | A particular section/page of a website used to advertise. | Zero rate | Zero rate |
| Content targeting | Adverts displayed alongside related content. | Zero rate | Zero rate |
| Behavioural targeting | Similar to retargeting – adverts displayed based on prior websites visited based on IP address. | Standard rate | Zero rate |
| Demographic targeting | Using sources of data on the targeted individual to base the advertisements on. | Standard rate | Zero rate |
| Audience targeting | Similar 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 rate | Zero rate |
| Location targeting | IP addresses used to target individuals in a particular area. | Standard rate | Zero rate |
| Lookalike targeting | Cookies used to identify potential new customers by reviewing current customers, advertiser then directly targets the potential new clients. | Standard rate | Zero rate |
| Device targeting | Example is an advertiser choosing certain devices to advertise to, not targeting specific individuals. | Zero rate | Zero rate |
| Daypart targeting | Advertising at specific times of day or specific days of the week. Not a targeted selection of individuals. | Zero rate | Zero rate |
Further guidance on these VAT rates can be found on the Gov.uk 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.
