VAT rules
What is an eligible body for VAT?
Short answer
An eligible body is an organisation that UK VAT law allows to supply education VAT free. The list includes schools, universities and their colleges, further education colleges, Office for Students approved fee cap providers, public bodies, non-profit organisations that put their profits back into education, and commercial English language schools for their EFL tuition only. A private college that distributes its profits is not on the list.
Who is on the list
HMRC's VAT Notice 701/30 groups eligible bodies as follows.
- Schools, sixth form colleges, tertiary and further education colleges, and centrally funded institutions.
- Universities, and colleges, institutions, schools and halls of a university.
- Approved fee cap higher education providers registered with the Office for Students.
- Centrally funded higher education institutions in Wales, Scotland and Northern Ireland.
- Local authorities, government departments, health authorities and non-profit bodies of a public nature.
- Non-profit organisations that meet the conditions below.
- Commercial providers of English as a foreign language, for their EFL tuition only.
The non-profit test
A charity, professional body or company can be an eligible body if it cannot and does not distribute any profit it makes, and any profit it makes from education is used only for continuing or improving that education. Both parts matter. A constitution that forbids distributions is not enough if money leaves the organisation in other ways, and a company that simply chooses not to pay dividends does not pass.
If you are a not-for-profit training provider that has been charging VAT on its courses, it is worth checking whether you meet this test. If you do, those fees may have been exempt all along.
What does not make you an eligible body
- Having your degrees validated by a university. In SAE Education Ltd v HMRC [2019] UKSC 14 the Supreme Court held that a private institute whose degrees were validated by Middlesex University was not a college of that university. The tribunals in the St Patrick's case reached the same view about Interactive Manchester.
- Accreditation or approval by an awarding body.
- Being regulated by Ofqual or inspected by Ofsted.
Where the St Patrick's ruling fits
The colleges in St Patrick's were not eligible bodies and did not claim to be. They won because the Court of Appeal held that UK law could not tax their courses differently from the same courses supplied by eligible bodies, judged from the student's point of view. So the ruling does not add anyone to the eligible body list. It gives some private providers an argument that their supplies were exempt anyway. See the case explained.
If you are an approved fee cap provider charging VAT
Approved fee cap providers are eligible bodies, so their education should normally be exempt. If you are in that category and have been charging VAT on fees, that looks like an error that can be corrected within the four-year limit, subject to the usual points on input tax and unjust enrichment.
Sources
- VAT Notice 701/30, section 4 on eligible bodies: GOV.UK
- VAT Act 1994 Schedule 9 Group 6 and its Notes: legislation.gov.uk
- SAE Education Ltd v HMRC [2019] UKSC 14: bailii.org
- St Patrick's International College Ltd & Ors v HMRC [2026] EWCA Civ 852: caselaw.nationalarchives.gov.uk