Source · Select Committees · Education Committee
Recommendation 60
60
Rejected
Advocate for VAT exemption for all FE providers and update the Committee on progress.
Conclusion
The Department for Education must make the case to the Treasury that all FE providers—including FE colleges and sixth form colleges—be exempt from paying VAT on expenditure. The Department must update this Committee in writing on the outcome of these discussions by April 2026. (Recommendation, Paragraph 220)
Government Response Summary
The government states the recommendation is 'NOT TAKEN FORWARD,' explaining that while education services are exempt, colleges cannot recover VAT on expenditure like many public bodies, and any tax system changes require broader public finance considerations.
Government Response
Rejected
HM Government
Rejected
NOT TAKEN FORWARD Government recognises that VAT is of interest to the FE sector, and particularly so since the reclassification of further education colleges into the public sector. Education services supplied by an “eligible body” are exempt from VAT. For VAT purposes, an “eligible body” broadly refers to most regulated, publicly funded, or not-for-profit education providers. This means no VAT is charged on supplies of education made by further education colleges, nor are further education colleges able to recover the VAT they have incurred on their expenditure. Many public bodies cannot recover the VAT they incur. The government keeps all taxes under review, and any proposals to change the tax system would need to be considered in the context of the broader public finances.