Independent HE lobbying on VAT changes finds success

On 5 October, the Office for Students confirmed that all providers registered with the OfS in the Approved (fee cap) category will be given the same VAT exemption as traditional universities, or those eligible for public funding, following a Treasury review of UK VAT rules.

IHE have been campaigning for change to the VAT rules since 2012, and have worked closely with the Department for Education and HMRC since 2016 to ensure that a level playing field for independent providers is properly established following the passage of the Higher Education and Research Act.

This change will ensure greater fairness and value for money for students, and offer greater clarity than the current University Title and College of University basis for VAT exemption. Providers that do have University Title or College of University status will be unaffected by the change.

Providers with Approved status may still be able to access a VAT exemption through another route (such as being an eligible body that does not distribute profit), providing they meet the relevant eligibility criteria.

The new VAT treatment will take effect on 1 August 2019, and the Treasury is expected to provide further details soon.

Responding to the announcement, Alex Proudfoot, Chief Executive of IHE said:

“Today’s announcement is another big step towards a higher education system which supports student choice in deed as well as word. There is no value for money in sending 20% of a student’s fees straight to the exchequer instead of investing it in their learning, and students should not be penalised for choosing whichever course is right for them.”

“Although further reform of the VAT system is still needed, this is a practical and positive move which addresses the unfairness of current rules while providing a clear process for VAT exemption under the new Office for Students framework.”

“It reaffirms the founding principle of the OfS, that all providers who follow the same regulations should be extended the same benefits for their students.”

  • On 5th October 2018