Charities – Social media advertising costs subject to 20% VAT

HMRC has recently confirmed in a letter to charities that they must pay the standard rate of VAT on social media advertising costs, as opposed to the zero-rate which applies to certain other types of advertising received. HMRC explains that the difference in VAT treatment is because social media advertising is distributed to a selected audience, which does not meet the conditions for advertising relief. VAT relief is generally restricted to advertising services for charities that are communicated to the general public.

However, HMRC’s letter does confirm that adverts placed in trade or religious magazines may remain zero-rated because the audience is still considered to be the general public.

This change could come at a significant cost to the charity sector, so please contact emailus@centurionvat.com if you or your charity will be affected.