Advertising – VAT zero rating

The placing of an advertisement by a charity in someone else’s media can usually qualify for zero rating. Supplies made to a trading subsidiary of a charity are excluded from this relief.

Different rules apply for digital and social media advertising – please find further information here.

Advertising covering any subject, including staff recruitment, in a third-party medium can qualify for zero rating, including advertisements on television, cinema, billboards, buses, in newspapers, programmes, annuals, leaflets and other publications, and on Internet sites.

Marketing and advertising of items to targeted individuals or groups are excluded from zero rate relief. HMRC VAT Notice 701/58: charity advertising and goods connected with collecting donations states that this exclusion includes telesales and direct mail by post, fax or email and marketing aimed at people in selected businesses or buildings. However, certain items addressed to targeted individuals or groups may be zero-rated because of the concessionary relief granted to pre-printed fundraising appeals and by the general relief available on certain items of printed matter.

The zero rating includes services such as design and preparation costs for artwork and typesetting that are closely linked to the production of a qualifying advertisement. It is not necessary for the design and preparation costs to be included in the same invoice as the advertising itself.

The relief does not include a supply used to create or contribute to a website that is the charity’s own, because in that case the advertisement is placed in the charity’s own media rather than in someone else’s. Where a charity supplies advertising services to another charity, these can be zero-rated.

To obtain zero rating, the charity will need to give the supplier a declaration in a suitable format.

This relief is available to charities whether or not they themselves are registered for VAT. Not all suppliers of advertising are aware of this relief, so it may be necessary for a charity to bring this to the attention of the supplier. A VAT refund can still be obtained by a charity from the supplier in the event that the VAT relief had initially been overlooked. It is generally possible to correct the position subsequently, subject to any applicable capping provisions.

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