Revenue and Customs Brief 5 (2019) - VAT rule changes for higher education
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Published 12 July 2019
of this brief
This brief provides an update on Revenue and Customs Brief 11
(2018): VAT rule changes for higher education and VAT
rules for higher education providers (VAT information sheet 08/18).
The previous brief announced that the government would be amending
the VAT law from 1 August 2019 to ensure continuity of the VAT
treatment for English higher education (HE)
An update is required as a result of changes being made to the way
in which providers will be funded by the Office for Students (OfS) from the start of the 2019 to
2020 academic year.
This brief announces that the change has completed its passage
through parliament and will come into effect from 1 August 2019, under
the Higher Education and Research Act 2017.
There are no changes to the VAT law affecting HE providers in Scotland, Wales and
HE providers in England and
3. Explanation of VAT Change
The change in legislation removes the VAT exemption for English HE providers which are currently
designated as eligible to receive support from central funding, or are
higher education corporations. The VAT exemption will apply to those
providers who are registered with the OfS
in the Approved (fee cap) category from 1 August 2019.
Note 1(c) to Group 6 of Schedule 9 to the VAT Act 1994 currently
refers to bodies that fall within subsections 91(5)(b) and (c) of the
Further and Higher Education Act (FHEA) 1992, but
subsections 91(5)(b) and (c) of FHEA 1992 will only
apply to institutions in Wales with effect from 1 August 2019.
Note 1(c) and eligible body status will only apply to HE providers that are registered with
the OfS in the Approved (fee
cap) category. Other HE
providers, such as bodies that are registered with the OfS in the Approved category, or
bodies that are not registered do not qualify as eligible bodies under
Note 1(c). However, such bodies may still qualify for eligible body
status if, or to the extent that, they are covered by the other notes
to Group 6. For example, Note 1(e) will continue to treat all
non-profit making and non-profit distributing bodies as eligible bodies.
The exemptions that relate to further education are unaffected,
although some providers of both higher and further education may wish
to register with the OfS in
the Approved (fee cap) category.
It is important to note that the exemption will not be back-dated
when a body becomes registered in the Approved (fee cap) category. All
English HE providers who will
become registered in the Approved (fee cap) category will also be
entitled to exempt their future supplies, the guidance in VAT
information sheet 08/18 remains applicable.
4. Revised VAT Notice and VAT manual
Paragraph 4.1 of VAT
Notice 701/30 (Education and Vocational training) will be amended
Eligible body status
4.1 An eligible body
With effect from 1 August 2019, an eligible body is:
a school, sixth form college, tertiary college or further
education college or other centrally funded further education
institution (defined as such under the Education Acts)
a centrally funded higher education institution in Wales,
Scotland and Northern Ireland (defined as such under the Education Acts)
the governing body of one of these institutions:
a non-profit making organisation that meets certain conditions
a commercial provider of tuition in English as a Foreign
Language, in which case special rules will apply (see section 9)
The VAT Education manual has been updated to reflect the change.
5. Further Information
For further information contact the VAT
About the Author
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Article Published/Sorted/Amended on Scopulus 2019-07-12 00:00:14 in Tax Articles