VAT on training course fees

Education and vocational training can be exempt from VAT, but the exemption belongs to the body that provides the training. A commercial academy run for profit usually does not qualify, so once you are VAT-registered you charge VAT on your course fees. Narrower exemptions can apply to funded training and to private tuition. The same rules apply to any private training provider. Beauty and aesthetics courses are the worked case.

How the education exemption works

The exemption sits in Schedule 9, Group 6 of the Value Added Tax Act 1994 and is explained in VAT Notice 701/30. It applies when education or vocational training is supplied by an eligible body. Eligible bodies include schools, colleges, universities and non-profit organisations that meet set conditions.

The same course can therefore be exempt when a college runs it and standard-rated when a company runs it. Your first question is who you are.

Private schools are an exception. Since 1 January 2025, education and vocational training that a private school supplies for a charge is standard-rated, even though the school is an eligible body. The rule also covers provision at a private school by a connected person, or under arrangements made to secure the exemption (Schedule 9, Part 3). A private school is one that provides full-time education for fee-paying pupils of compulsory school age, or mainly for fee-paying full-time students aged under 19. A training academy that teaches adults is not usually a private school.

What this means for a commercial academy

If you run courses to make and distribute profit, treat your fees as standard-rated unless a narrower exemption applies. The table above sets out the conditions. They turn on facts you can check.

Funded training

This exemption turns on where the money comes from. A levy-funded apprenticeship paid through the apprenticeship service account is an example. Fees that learners pay directly do not come from a listed funder. If learners pay with an Advanced Learner Loan, ask HMRC before you treat the fees as exempt.

Private tuition

This exemption turns on who teaches and what the subject is. It covers your own tuition only, so taking on other teachers changes the position. Their tuition is standard-rated. You must then choose one of these methods:

• split your tuition between the exempt and standard-rated parts using a fair and reasonable method
• treat all of it as standard-rated, whoever delivers it

Ask HMRC which method suits you.

Goods and services you sell with a course

If you are not an eligible body, goods and services you sell alongside training are standard-rated unless a relief applies elsewhere. This includes a starter kit of products and tools.

VAT registration and recovering VAT on your costs

You must register for VAT when your taxable turnover passes the registration threshold. Taxable turnover counts what you sell that is not exempt. If all your course income is exempt, it does not count towards the threshold.

If you make exempt supplies, you generally cannot recover the VAT you pay on costs that relate to them, such as room hire and equipment. If you are registered and charge VAT on your fees, you can generally recover the VAT on those costs.

Learners who are not VAT-registered cannot recover VAT on your fees. Charging VAT therefore raises the cost of your course for individual learners. Set your prices with that in mind before you launch.

What to do next

If your academy is a commercial company, assume standard-rated fees and plan your VAT registration around the threshold. If you think an exemption applies, contact the HMRC VAT helpline. Do the same if you think beauty therapy might qualify as private tuition. Keep a record of what HMRC tells you.

To work out when you must register, see Check if you need to register for VAT. Once you are registered, see How to charge VAT correctly. For the full path from idea to first booking, follow Start a beauty or aesthetics training business.