HMRC has written to charities to inform them that they must pay VAT on social media advertising.
Traditionally, charities have had their VAT obligations for advertising services zero-rated, however this is not applicable to those targeting a specific audience.
As advertising through social media is often targeted at selected individuals or groups and not to the general public, HMRC says it cannot qualify for VAT relief.
Despite the change in relief for social media adverts, adverts placed in trade and religious magazines can still benefit from the zero-percent rate as they are classed as adverts for the ‘general public’.
The Charity Tax Group (CTG) has previously said that a tax on social media adverts could cost charities millions and it is in discussions with HMRC over the issue.
If you have been contacted by HMRC in relation to this issue, please contact a member of our charities team.