Further Education and Sixth Form Education: VAT
The question
To ask the Chancellor of the Exchequer, whether she plans to equalise the VAT treatment of Further Education colleges and school sixth forms.
Answered by Dan Tomlinson
Further Education (FE) funding is vital to ensure people are being trained in the skills they need to thrive in the modern labour market. The 2025 Spending Review provided an additional £1.2 billion per year by 2028-29 for skills and £1.7 billion of capital funding to help colleges maintain the condition of their estate. In addition, the Government is providing £375 million of capital investment to support the FE system to accommodate increasing student numbers.
For their non-business activity, FE colleges are unable to reclaim VAT incurred. We operate VAT refund schemes for schools and academies which are designed variously to ensure that VAT is not a burden on local taxation, and that academies are not disincentivised to leave LA control. FE colleges do not meet the criteria for either scheme.
In relation to business activity, FE colleges enjoy an exemption from VAT which means that they do not have to charge VAT to students but cannot recover it either.
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