Goods or services supplied to charities (VAT Notice 701/58)

Find out when you can zero rate VAT for advertisements and goods used for the collection of donations.

1. Overview

1.1 Who should read this notice

Charities and businesses which make supplies to charities. In particular this notice should be read by:

  • all charities
  • suppliers of advertising services to charities
  • suppliers of printed matter to charities
  • suppliers of charity collection boxes
  • suppliers of stickers and emblems used as charity lapel badges

1.2 What this notice is about

This notice explains which advertising services and closely related goods are zero-rated when supplied to a charity. It also explains which goods for the collection of donations can be zero-rated by concession.

1.3 History of the relief

Following the application of VAT to newspaper advertising in 1984, charities successfully campaigned for the retention of a zero rate for certain advertisements. Over the years the scope of the relief widened to include broadcasting of advertisements as well as printed media advertisements. Concessionary zero rating of certain types of printed matter has also been allowed, and the supplies covered have changed over time.

Following the Review of Charity Taxation in 1997 to 1999 the scope of the zero rate for advertising was widened. The scope of the concessionary zero rate was also extended and formalised into an Extra Statutory Concession (ESC).

1.4 The law covering this notice

This notice gives the position with effect from 1 April 2000.

The full text of the relevant law is reproduced in section 11. The Extra Statutory Concession is reproduced in section 12.

2. Scope of the advertising relief

2.1 Who qualifies for zero rating

Any charity can benefit provided the supply is made by a third party, including its separately VAT-registered trading subsidiary. But the relief is not available for supplies to trading companies.

VAT-registered trading companies are still entitled to reclaim the VAT incurred on business expenses in the normal way.

2.2 What makes a charity

Bodies in England and Wales have charitable status when they’re either registered, excepted or exempted from registration with the Charity Commission, or bodies anywhere in the UK which are treated by HMRC as charitable. Not all non-profit making organisations are charities. The term ‘charity’ has no precise definition in any law. Its scope has been determined by case law.

You need to make a decision about whether your organisation is a charity using the following guidelines.

Charities are non-profit distributing bodies established to advance education, advance religion, relieve poverty, sickness or infirmity or carry out certain other activities in the community.

In England and Wales charities must normally register with the Charity Commission (not to be confused with VAT registration). Some very small charities do not need to register with the Charity Commission.

There are also some other special cases where particular bodies do not need to register. If an organisation is uncertain of its status it should contact the Charity Commission.

In Scotland and Northern Ireland charities may not register with the Charity Commission. HMRC decides whether these bodies are eligible to claim the direct tax exemptions. For further information contact the Charities and Community Amateur Sports Clubs team.

There’s no distinction for VAT purposes between those charities registered with the Charity Commission and those that are not. Unregistered charities claiming VAT relief may need to demonstrate that they have ‘charitable status’. This may be achieved from their written constitution or by the recognition of their charitable status by HMRC.

2.3 Relief on advertisements

The relief covers all types of advertisements on any subject, including staff recruitment. The name or logo of the charity does not need to be included for relief to be allowed. This relief does not override charity law or the need to meet the British Codes of Advertising or any other relevant regulations.

3. Advertising media

3.1 Media where charities can advertise VAT free

Any medium which communicates with the public. This includes all the conventional advertising media such as:

If space is sold to a charity for advertising on other items, this will also be covered by the zero rate. Examples include:

  • beer mats
  • calendars
  • the reverse of till rolls
  • clothing

The sale of the items themselves will not be VAT free, unless they qualify for other reliefs, for example, books or children’s clothing.

3.2 What the term ‘the public’ covers

It means the general public, which can be widely interpreted to include businesses and small groups, such as:

  • readers of a trade magazine
  • readers of a religious magazine
  • people in particular parts of the country who may be targeted by a general poster campaign in their area
  • internet audiences targeted by a general campaign

It does not include selected individuals or groups.

3.3 Individuals and groups

These are people who are:

  • selected by individual home, business or email address whether named or not
  • individually named people, all those at the same address such as family groups or everyone in a particular building

3.4 Direct mail and telesales

Both are left out of the relief because they’re not a supply of advertising time or space but are marketing and advertising addressed to selected individuals or groups. Direct mail includes that sent by post, fax or electronically.

Individual elements of a postal package can still be zero-rated under the concession for appeal letters and envelopes, see section 6, or because they’re, for example, brochures or leaflets. For details on zero rating of printed matter (including the ‘package test’ concession) see paragraph 6.4.

3.5 ‘Package test’ for printed matter applying to charities’ direct mailing

Suppliers can apply the package test for printed matter to charities’ direct mailing materials. See paragraph 6.4 for more information.

See Postage, delivery and direct marketing (VAT Notice 700/24) for details of how to decide the liability of goods that are delivered.

3.7 Information on the internet

Information, whether or not in the form of advertising, placed in, on or through a charity’s own internet site, does not qualify for zero rating. This is because it is not a supply of someone else’s time or space. This applies regardless of whether the website is owned, rented, or loaned to the charity. Since the information on the website is left out of the relief, it follows that the associated design costs are also left out.

Advertisements supplied by digital methods have the potential to fall within the zero rate. However, digital advertising services include a level of selection that can make it difficult to determine if the zero rate can apply. In 2020, HMRC reviewed a range of digital advertising situations and accepted that some, though not all of those considered are eligible for the zero rate.

Standard rated:

  • email advertisement
  • natural hits
  • social media and subscription website accounts

Zero rated, subject to all other conditions being met:

  • audience targeting
  • behavioural targeting
  • channel targeting
  • content targeting
  • daypart targeting
  • demographic targeting
  • device targeting
  • direct placements on third party websites
  • location targeting
  • lookalike targeting
  • pay-per click advertising
  • retargeting

For a detailed description of these situations, please see the VAT Charities manual at VCHAR5000.

3.8 Methods excluded from the relief

Any method that is not the supply of someone else’s advertising time or space, or is in the form of general marketing and promotion. The following are left out:

  • direct mail and telesales (see paragraph 3.4)
  • anything on a charity’s own internet website (see paragraph 3.7)
  • advertisements where there’s no supply of time or space to the charity, for example, an advertisement on a charity’s own greeting cards
  • exhibition stands and space
  • services of distribution
  • commemorative items whether or not they bear the charity’s logo, for example, pens and adult clothing

4. Design and production of advertisements

4.1 Relief on the design or production of an advertisement

Provided it’s intended that the advertisement will meet the conditions set out in section 2 and section 3, the services of design or production of the advertisement will also qualify for the relief. This includes the design of a poster or the filming or recording of an advertisement to be broadcast.

Generally, if a digital advertisement being published qualifies for the zero rate, the copyright, design and production services will also qualify. However, services supplied by copywriters and designers for the purpose of search engine optimisation, that is structuring a website so that it contains as many keywords as possible, do not qualify for the zero rate. These services involve the optimisation of a charity’s own website and are specifically excluded from the relief.

4.2 Relief on goods linked to the design or production of an advertisement

Goods closely related to the design and production, for example:

  • a finished article like a film or recorded cassette
  • an element to be incorporated in the advertisement such as a photograph, picture or a sound track
  • all other versions of an advertisement produced, to see which works best, even if it’s the intention that only one version will be used

4.3 Charities creating their own advertisements

There’s no relief because this is not a supply to the charity. Therefore, it is not possible for charities to purchase the equipment and raw materials they use in creating these advertisements VAT free.

4.4 Liability of services with advertising agencies

When a charity uses an advertising agency instead of having a contract with the suppliers of advertising or printing, the VAT liability depends on whether the agency is acting as a principal or an agent. The normal VAT rules for agent or principal agreements will apply.

See VAT guide (VAT Notice 700) for further guidance. This means that where an advertising agency:

  • is the principal, its supply of qualifying advertising time or space and associated production costs to the charity will be zero-rated, however, supplies to the agency will be standard-rated
  • acts solely as an agent, the agency fees, charged to the charity, will be standard-rated, the supply of advertising time or space will be direct to the charity and will be allowed for zero rating under this relief in the normal way

4.5 It looks as if the liability has to be determined backwards

To some extent, it does. It must first be determined whether a proposed advertisement is intended to be supplied in a way which will qualify for zero rating. If it’s the preceding design and production work when supplied to a charity, it will also be zero-rated.

4.6 Pay VAT retrospectively on production costs if the advertisement does not get used

A charity will not have to pay, provided it was clearly the charity’s intention to use the services for an advertisement which would have qualified for relief, it will not be required to pay the tax in the event of the work being wasted.

4.7 Apply for retrospective relief

A charity cannot apply for retrospective relief on goods or services purchased for another purpose but subsequently used for a qualifying advertisement.

4.8 Advertisements used in qualifying and non-qualifying media

When a charity knows that a proportion of their purchases, such as posters or artwork for magazine advertisements, are going to be used in public places as well as in-house (for example, in the charity’s own magazine or shop window), this should be reflected in the declaration given to the supplier. The VAT liability should be split in line with this.

5. The Extra Statutory Concession for certain goods used by charities in connection with collecting monetary donations

5.1 The definition of Extra Statutory Concessions

These are formal, published concessions but they have no legal force.

5.2 Goods that you can zero rate under the concession

The goods are:

  • certain printed stationery used for appeals (see section 6)
  • collection boxes and receptacles (see section 7)
  • lapel stickers and similar tokens (see section 8)

6. Extra Statutory Concessions in relation to printed stationery

6.1 Printed stationery that qualifies

The following items can be zero-rated under the Extra Statutory Concession when supplied to a charity:

  • collecting envelopes which ask for donations of money, and stewardship and similar envelopes used by religious and other organisations in their planned giving schemes
  • pre-printed appeal letters primarily aimed at seeking money for the charity
  • envelopes used to send out appeal letters and envelopes for sending donations to the charity provided each type is over-printed with an appeal request related to that contained in the letter, or are distinguishable from the charity’s usual stationery

This relief does not cover general stationery supplied to charities.

6.2 Stewardship envelope used in planned giving schemes

Some religious organisations, and other charities, ask ‘members’ to donate money on a regular basis. The people donating the money are given a series of envelopes, known as stewardship envelopes, which they use for their monthly or weekly giving. Stewardship envelopes that are clearly for use in a planned giving scheme and are printed with at least the name of the place of worship or charity can be zero-rated.

Money collecting envelopes that have been especially printed for a charity, making it known that they’re donation envelopes, but leaving a space for completion of the individual places of worship, or charity branches, also qualify. Plain envelopes bearing only a symbol (such as a cross printed on them), and available from retailers as general stationery, do not qualify.

6.3 An appeal letter

An appeal letter is a single or multiple sheet letter pre-printed with the description of the cause. The primary purpose of the letter must be a request for donations. It must be a letter not just a form to fill in and return with a donation.

It does not matter whether the letter has the individual addressees’ details included when supplied to the charity. A letter without an individual’s details might qualify for zero rating as a leaflet, see Zero rating books and printed matter (VAT Notice 701/10), in which case the purpose of the letter would be unimportant.

6.4 ‘Package test’ applying for printed matter of stationery that is zero-rated under this concession

The package test for determining the VAT liability of a mixed supply of printed items (such as items for a mailshot) is a separate concession described in Zero rating books and printed matter (VAT Notice 701/10).

With effect from 1 August 2003 the package test concession has been extended so that some of the charity stationery zero-rated under the Extra Statutory Concession. See Zero rating books and printed matter (VAT Notice 701/10).

6.5 VAT on the whole package if a charity fails to qualify for relief under the ‘package test’

If the test does not result in zero rating of the package, a charity will still be able to claim zero rating on any item which qualifies for relief either under schedule 8, group 3 or the Extra Statutory Concession, see section 5.

7. Extra Statutory Concessions in relation to boxes and receptacles for the collection of money

7.1 Types of boxes and receptacles that qualify

All types of boxes and receptacles used for collecting money qualify providing they meet all the following 3 conditions.

  1. They must be secure, that is, capable of being sealed, for example, by either:
    • tamper evident sticker
    • tape
    • lock
  2. They must clearly be charity collecting boxes for a named charity
  3. They must either bear the name of the charity, for example, by either:
    • indelible printing
    • embossing
    • having raised letters
    • allowing for the charity name to be added later

7.2 Examples of boxes which might qualify

Some examples are:

  • pre-printed card collecting boxes
  • moulded plastic collecting boxes
  • models in any material including hollow plaster, wood, base metal or glass

These boxes may be hand held, floor standing, wall mounted or for placing on a table top or shop counter.

7.3 Boxes which will not qualify

Boxes of greater value, such as those made of precious metal, are not zero-rated.

7.4 Concession for collection buckets

General purpose buckets of the kind available from hardware stores are not covered by the concession.

The following will qualify for relief:

  • specially designed tamper proof bucket lids with tamper evident stickers making them suitable for a charity donation
  • bucket shaped receptacles, which cannot be used for anything except collecting donations of money
  • bucket packs for assembly consisting of bucket, money collecting top and tamper evident seals and labels

7.5 Concession for charity boxes with mechanical parts

Elaborate receptacles which have an extra purpose, such as gaming or quiz machines, or have some form of mechanical entertainment do not come within the concession.

Receptacles where, for example, a simple balance mechanism moves the money from one level to another, or the weight of a coin causes it to roll helter-skelter fashion into the collecting area are included in the relief.

7.6 Concession for multi-purpose receptacles

Receptacles that have another purpose while also having a coin slot do not qualify, such as:

  • wishing wells
  • fonts
  • furniture
  • fixtures and fittings

A simple collecting box fixed to any of these items would still qualify.

8. Extra Statutory Concessions in relation to lapel stickers and similar tokens

8.1 Lapel stickers and badges that qualify

Only lapel stickers, emblems and badges which are to be given free as an acknowledgement to donors of money, have no intrinsic value and are low cost to the charity will qualify.

The relief is restricted to small items designed to be worn on clothing, of a kind that were traditionally attached to the lapel. Included are:

  • paper stickers
  • ribbons
  • artificial flowers (if these are used as a symbol of the charity)
  • metal pins and badges

Large items for decorating buildings, vehicles and monuments are not included in the relief even if these are just bigger versions of a lapel badge.

8.2 Definition of ‘no intrinsic value’ and ‘low cost’ for lapel attachments

Emblems or badges given in return for any non-specified donation or a suggested donation of up to £1. In practice this would mean that the cost to the charity would be considerably less than £1 per unit.

8.3 Relief on lapel attachments to be sold for a fixed price

There’s no relief on lapel attachments, although relief will apply if a charity suggests a donation of £1. If lapel emblems or attachments are offered for a fixed price, even if this is only £1 or less, they do not qualify for relief because the emblems are not given away freely.

8.4 Relief for goods a charity buys to make its own lapel attachments

Equipment for manufacturing badges is not included in the relief. If a charity buys identifiable constituent parts, which it will assemble into badges in-house, these come within the concession.

8.5 Tokens that are intended to be given away

The normal VAT liability will apply.

8.6 Relief on containers for holding the lapel attachments

There’s no relief for the containers. If the container is merely normal packaging for the lapel attachments then these and their container are a single zero-rated supply of lapel attachments. The more substantial containers, such as those with a strap to hang around the neck, are items in their own right and cannot be included in the relief. The supply of an empty container is also standard-rated.

8.7 Relief on containers for lapel attachments with an integral collection box

Where a cardboard collecting receptacle is incorporated in a cardboard tray that holds lapel attachments, and it’s supplied as a single item (often as a flat pack) there is a single supply for VAT purposes and normal rules apply. Providing the main purpose of the goods can be seen as the collecting receptacle then the whole supply can be zero-rated.

9. Other reliefs

9.1 Other reliefs available

The reliefs described in this notice should not be confused with those contained in Zero rating books and printed matter (VAT Notice 701/10). Some goods, such as books and leaflets, will be zero-rated to charities under the relief for printed matter as they are when supplied to all other customers.

10. How to claim relief

10.1 Claim relief if you’re a charity

When a charity claims any of the special zero rate reliefs which are not generally available to all customers, suppliers must be sure that all the relevant rules for relief are met. It’s recommended that a charity gives its supplier a declaration that the specific rules for the claimed relief are fulfilled.

10.2 Declarations

Declarations are usually necessary but not always. The current law should make it easier for printers, publishers, broadcasters and similar suppliers to judge whether their supplies to charities will be zero-rated. Suppliers will, however, always need evidence that the supply was made to a charity.

An example of where a declaration may not be necessary is when a charity requests repeat orders, has made a declaration for the first one and the information contained in that declaration has not changed.

10.3 Supplier’s responsibility

It’s the supplier’s responsibility to make sure that the correct VAT rate is applied. They must take reasonable steps to check with the charity anything which they cannot verify themselves. Any extra verifications carried out should be recorded and kept with the declaration of eligibility.

If a supplier has taken reasonable steps to check the validity of a declaration but fails to identify an inaccuracy and in good faith makes the supplies concerned at the zero rate, HMRC will not seek to recover the tax due from the supplier. It’s therefore important that suppliers carefully check declarations received. (See the Extra Statutory Concession on incorrect customer declarations in VAT Notice 48: Extra Statutory Concessions.)

10.4 Charity’s responsibility

A charity must give its supplier evidence that it’s a charity.

For lapel emblems it will be necessary to declare that they keep to the use criteria of the concession. When asked for further evidence the charity must be able and willing to give it before VAT relief can be given.

10.5 Form of declaration

HMRC has suggested a form of declaration which you may copy and use if you wish. It’s strongly recommended that suppliers fill in part 2 of this form. Other types of declaration whether in paper form, faxed or electronic that contains sufficient verifiable information to accurately identify the customer are acceptable to HMRC.

Charity advertising request for zero rating

Part 1 is to be completed by the charity.

(tick as appropriate)
(*delete as appropriate)

I ………………………………………. (full name)
………………………………………… (status in organisation)

of ……………………………………… (name and address of organisation) ………………………………………… …………………………………………

Declare that the above named charity is *buying from/importing from:

…………………………………………………………. (name and address of supplier)

The following which *is/are eligible for relief from VAT under item

8 or 8A
8B or 8C
of zero rate group 15

or qualify as

printed appeal letters
printed envelopes for use with appeal letters
printed monetary donation collecting envelopes
monetary donation collecting boxes
lapel stickers or badges or component parts

………………………………………………………… (signature and date)

Note: it’s the supplier’s responsibility to ensure that the goods or services supplied are eligible before zero rating them.

Part 2 is to be completed by the supplier.

I have read the guidance in VAT Notice 701/58: charity advertising and goods connected with collecting donations and agree that the goods and services described come within the category shown.

Signature and date ………………………………………………………

This certificate should be retained by the supplier for production to a VAT officer.

And any notes on steps taken to verify the declared details.

11. Extract from the VAT Act 1994 as amended by SI 2000/805

Schedule 8 — zero rating: group 15 — charities

See paragraph 1.4.

Item number:

(8) The supply to a charity of a right to promulgate an advertisement by a medium of communication with the public.

(8a) A supply to a charity that consists in the promulgation of an advertisement by such a medium.

(8b) The supply to a charity of services of design or production of an advertisement, that is or was intended to be, promulgated by such a medium.

(8c) The supply to a charity of goods closely related to a supply within item 8b.


(10a) Neither of items 8 and 8a includes a supply where any of the members of the public (whether individuals or other people) who are reached through the medium are selected by or on behalf of the charity.

For this purpose ‘selected’ includes selected by address (whether postal address or telephone number, email address or other address for electronic communications purposes) or at random.

(10b) None of items 8 to 8c includes a supply used to create, or contribute to, a website that is the charity’s own.

For this purpose a website is a charity’s own even though hosted by another person.

(10c) Neither of items 8b and 8c includes a supply to a charity that is used directly by the charity to design or produce an advertisement.

12. Extra Statutory Concession

See paragraph 1.4.

VAT — zero rating of supplies of certain goods used in connection with collection of monetary donations

This concession applies to supplies to a charity of the following goods:

  • lapel stickers or attachments designed to be worn on the lapel, which are of no intrinsic value, low cost to the charity and are given as a token in acknowledgement of a donation
  • component parts of items when supplied for self assembly
  • any form of receptacle which:
    • is manufactured specifically for the purpose of collecting donated money
    • is used solely for collecting money for charity
    • is, or will be, clearly marked as collecting for a named charity
    • can be secured by lock or tamper evident seal
  • bucket lids, designed to fit buckets and provide a secure seal, for use solely in connection with collecting money for charity
  • pre-printed letters the primary purpose of which is to appeal for money for charity (not necessarily including the addressees’ details)
  • envelopes used in conjunction with letters described for sending donations, provided that they’re over-printed with an appeal request related to that contained in the letter
  • outer envelopes used in conjunction with letters, provided that they’re over-printed with an appeal request related to that contained in the letter
  • pre-printed collecting envelopes appealing for money (of the type used by the welfare charities and which are usually hand delivered to domestic premises)
  • stewardship envelopes used for planned giving which, as a minimum requirement, are pre-printed with the name of the relevant place of worship or other charity

Where this concession applies, the supply may be treated as if it were a zero-rated supply.

This concession applies from 1 April 2000.

The Commissioners may withdraw or restrict the use of this concession if they have reasonable cause to believe that it’s being abused.

Your rights and obligations

Read Your Charter to find out what you can expect from HMRC and what we expect from you.

Help us improve this notice

If you have any feedback about this notice please email:

You will need to include the full title of this notice. Do not include any personal or financial information like your VAT number.

If you need general help with this notice contact the helpline for Charities and Community Amateur Sports Clubs, if you have another VAT question you should phone our VAT helpline or make a VAT enquiry online.

Putting things right

If you’re unhappy with HMRC’s service, contact the person or office you have been dealing with and they will try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

How HMRC uses your information

Find out how HMRC uses the information we hold about you.

Updates to this page

Published 1 March 2002
Last updated 26 September 2022 + show all updates
  1. Sections "Media where charities can advertise VAT free", "What the term 'the public' covers", "Information on the internet" and "Relief on the design or production of an advertisement" have been updated.

  2. The section 'Help us improve this notice' has been updated to include a link to the relevant contact for Charities and Community Amateur Sports Clubs.

  3. First published.

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