HM Revenue and Customs Brief 2/18 - VAT - treatment of Advanced Learner Loans
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1. The purpose of this
This brief explains HMRCís
view on the tax treatment of receipts of payments of Advanced Learner
Loans from Student Finance England by educational bodies.
Student Finance England is part of the Student Loan Company
and acts as agent for the Department for Education.
This brief doesnít apply to those educational bodies that are
eligible bodies (see Section 3).
is aware that policy isnít being applied consistently, so this brief
confirms the policy to be applied in these particular circumstances.
Group 6 of Schedule 9 to the VAT Act 1994 exempts supplies of
all education, and closely related goods or services, made by an
eligible body. Eligible bodies include schools, universities, further
education colleges and non-profit-making bodies that ring-fence any
surpluses to supplies of education.
The bodies which can exempt all their supplies of education
are set out in paragraph 4.1 of VAT Notice 701/30: education and
Other bodies may exempt certain supplies of education,
vocational training and closely related goods and services where the
supplies ďare ultimately a charge to funds provided by the Secretary of
StateĒ for Education.
These schemes are explained in detail in Section 13 of VAT
Notice 701/30: education and vocational training.
3. The correct tax
treatment of Advanced Learner Loans
The Advanced Learner Loans are provided under a contract
between the student and the Secretary of State for Education, and are
administered by Student Finance England. The loan is repayable by the
student in accordance with the regulations in force at the time
repayment falls due.
The Advanced Learner Loan is not a grant nor is it funding
provided to the course provider for VAT purposes. Itís subject to an
interest charge payable by the student on the repayments over time. HMRC views this
as a loan which is ultimately funded by the student and not by the
Secretary of State.
Consequently, receipt of the Advanced Learner Loan by the
education provider doesnít result in the course qualifying for exempt
treatment under Items 5 to 5C of Group 6 of the VAT Act 1994. VAT is
due at the standard rate on the educational providerís full charge for
the education it provides to the student.
The only exception is where the provider meets the criteria
for being an eligible body for the purposes of the education exemption
(paragraph 4.1 of VAT Notice 701/30: education and vocational
training). These bodies can exempt all of their supplies of education
and closely related services regardless of how theyíre funded.
4. Operative date
The policy outlined in this brief is operative with immediate
effect as itís a clarification of HMRCís existing
will write to any business that has received an incorrect ruling or
guidance and will issue a revised ruling, from a current or future
date, depending on the individual circumstances of the education
If businesses have adopted an incorrect treatment on the
advice of HMRC,
they should write to us quoting Revenue and Customs Brief 2 (2018) by
31 March 2018 at the latest, providing evidence if there are individual
circumstances to be taken into account.
Businesses that donít do this will be expected to apply the
correct treatment from the date of this brief.
5. Further information
Contact the VAT Helpdesk to get more information.
An amendment is being made to the VAT manual on education.
About the Author
© Crown Copyright 2018.
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for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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