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Charity Tax Group campaign yields results on digital advertising VAT policy

Charity Tax Group campaign yields results on digital advertising VAT policy

A Charity Tax Group campaign has successfully seen changes made to HMRC’s policy on ‘digital advertising’ VAT that will result in cost savings for charities.

HMRC has previously ruled that most digital advertising should be subject to VAT, and had started to raise assessments to recover VAT from some advertising agencies. These costs were being passed on to charities.

The Charity Tax Group (CTG) has been challenging HMRC on this for more than two years.  This month (July), it received a letter clarifying the HMRC view of the VAT position.

It states that HMRC now accepts that VAT is no longer considered due on the majority of internet search browsing advertisements, and sets out the categories of advertisements that fall into this category.



However, all advertising sent to a social media address that is a ‘personal account’, or where the recipient has paid a subscription for the site continues to be treated by HMRC as standard rated for VAT purposes.

The HMRC letter suggests that a review of the VAT legislation will be incorporated into a broader DCMS review on the future regulation of advertising.  CTG has long argued that the VAT legislation in this area is no longer fit for purpose and welcomes this development. It also recommends that charities seek advice from their professional VAT advisers on what the next steps are for them.

Richard Bray, CTG Vice-Chairman said: 

“This development is good news for charities.  It will result in significant VAT savings on the cost of many forms of digital advertising at a time when they need financial help the most. We are so pleased that CTG’s persistence in its discussions with HMRC have achieved such a positive result.”

Andrea Marshall, Tax Specialist, British Universities Finance Directors Group (BUFDG) said: 

“This is a big step forward which provides clarity on the VAT treatment of an increasingly important communication channel and will undoubtedly help charities to achieve more in these straitened times. This has been achieved through the Charity Tax Group’s patient and collaborative approach to resolving this matter with HMRC.”


Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via

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