VAT rules
Do training companies have to charge VAT?
Short answer
Usually, yes. A commercial training company that is not an eligible body charges VAT at 20% once it is VAT registered, unless the training is government-funded vocational training or English as a foreign language. Exemption is not always good news. If your customers are VAT-registered employers they recover the VAT anyway, and exempt income costs you the VAT on your own costs.
Who pays matters most
| Who pays the fee | Can they recover VAT? | Would exemption help? |
|---|---|---|
| VAT-registered employer | Usually yes | Rarely. Their cost is the same either way and you lose input tax. |
| Individual learner | No | Possibly. VAT is a real cost to them, and past VAT may be reclaimable if an exemption applied. |
| Charity, public body or exempt business | Often not in full | Possibly. Depends on their own VAT position. |
| Public funding | Not applicable | The funded share is exempt already. |
When training is standard-rated
- Management, sales, IT, compliance and similar courses sold to businesses.
- Short professional or CPD courses with no equivalent at universities or colleges.
- Training delivered through a limited company, even by one trainer, unless another route applies.
Where exemption may apply
- Training funded by the Department for Education or an apprenticeship service account. See funded vocational training.
- English as a foreign language. See EFL.
- Not-for-profit training companies that meet the eligible body test. See eligible bodies.
- Courses comparable to those at universities or FE colleges, sold to learners who pay for themselves. That is the St Patrick's route, and HMRC is appealing it. See the case explained.
Mixed training businesses
A business that sells both standard-rated corporate courses and exempt courses becomes partly exempt. It can keep all its input tax only if the exempt share stays within the de minimis limits. Above that, some input tax is lost every year. Before chasing a claim for past VAT, it is worth modelling what exemption would do to your VAT position going forward. See input tax and partial exemption.