Closely related to education
Goods and services that are usually subject to VAT are exempt if they are considered to be “closely related” to the supply of education.
In general terms 'closely related' refers only to goods and services that are:
- For the direct use of the pupil, student or trainee
- Necessary for delivering the education to that person.
The following supplies may be considered 'closely related' if these conditions are met.
Accommodation
Student Accommodation -
The supply of bedded accommodation is normally standard rated.
However in the case of student accommodation provided by a University, HMRC consider it to be a supply “closely related” to the supply of education and so it is exempt from VAT. The exemption covers all students who rent accommodation, unless they are no longer registered as students in which case they should be charged VAT.
Accommodation supplied to pupils, students and trainees of other schools, colleges or universities that provide exempt education is also exempt.
Non Student Accommodation -
When bedded accommodation is supplied to persons, other than those described above, the University is acting in a similar capacity to a hotel and the supply is standard rated and therefore subject to VAT. This includes accommodation provided to University staff, visiting lecturers and the general public.
Catering & Hospitality
Catering and hospitality that is for the direct use of a student and is necessary for delivering education to that person is exempt from VAT. In practice, this means that student catering is exempt from VAT, but catering for staff and other non-students is subject to VAT at the standard rate.
Field Trips
Trips organised by the University for students that are closely related to the courses that they are enrolled on are exempt from VAT. Other trips that are not related, for example sightseeing trips, are not closely related to education and are subject to VAT at the standard rate.
Student Placements
Any charge to a business, made by the University for a student industrial/work placement, is subject to VAT at the standard rate.
Payments made by the University to a placement provider that are made simply to fund a student’s salary, with no requirement for anything to be provided in return, are outside the scope of VAT.
Graduation Services
Graduation services supplied to ܽƵ students are exempt from VAT. However, graduation tickets supplied to friends and family are subject to VAT at the standard rate.
Supplies not ‘closely related’ to Education
The following are examples of goods and services that are not considered 'closely related' to supplies of education and are therefore subject to VAT:
- Supplies to University staff (including tutors on summer schools) and to other non-students.
- Sales of goods from school shops, campus shops and student bars.
- Sales from vending machines. Vending machines supplying confectionary and beverages are subject to VAT.
- Sales of goods not needed for regular use in class.
- Separately charged laundry and other personal services. Laundry charges included in an overall accommodation fee are not subject to VAT.
- Admission charges (other than for taking part in sports activities) - for example, admission to plays, concerts, dances, sporting venues, exhibitions, and museums.
- Administration and management services.
- Commission for allowing sales by outside organisations at an educational establishment.
- Non-student accommodation (see above).