Sales/Income in the UK

Education provided by a university for payment is exempt from VAT. This is the main VAT exemption for income received by the University.

'Education' includes not only the traditional supplies of education such as educational provision to undergraduate students, but all supplies of education. So the exemption includes income received from:

• seminars
• conferences
• short courses and lectures
• sporting and recreational courses.

It also applies whether the recipient of the education is a registered student of the University or a private individual attending a seminar or a business buying courses.

In addition to the main supply of education, exemption is also available for income received from supplies which are closely related to the supply of education and which are supplied either:

1. directly to the student; or
2. to another University

The term closely related generally refers only to goods and services that are for the direct use of the pupil, student or trainee and necessary for delivering the education to that person. This includes, for those attending the University or participating in a course, conference or seminar:

• any accommodation
• catering
• transport
• the photocopying of course materials
• supply of exam calculators
• charges for the use of computers by a student

However, there are some areas where the exemption does not apply. For example, alcohol is not seen as being a closely related supply. A charge for attending a conference which includes a meal may well have a VATable element which relates to the wine served at the meal.

There are also some areas where the exemption cannot be applied because it does not fall within the rules even though the ultimate beneficiary of the sale may be a student.

Example

• A charge to a lecturer (rather than the lecturer's institution) for photocopying lecture notes cannot be exempted because although the notes will be used by the students, the lecturer is not another University, College or School.
• A charge to another University, College or School for a lecturer's use of a computer cannot be exempted because the user is a lecturer not a student.

Also if the University were to charge a student for something that was not related to their education this would be VATable.

Basic room hire is exempt from VAT unless the University has opted to tax the property, in which case the room hire is Standard Rated.

The only buildings the University has opted to tax are:

• the Computer Laboratory, William Gates Building JJ Thompson Avenue
• the Music School, West Road
• the ADC Theatre, Part Street
• the Entopia Building, I Regent Street (CISL)

The hire of a room in any of these buildings is therefore Standard Rated.

Note: If the charge covers additional costs, including equipment hire and facilities such as support staff, the charge becomes subject to VAT at the Standard Rate.

Any medical services provided by a medical doctor are exempt. This also applies to medical services provided by registered nurses and dentists. However, if a medical doctor provides a non-medical service this

Stamps/postage charges are exempt. This will normally arise where a department is recharging franking machine costs to a member of staff or an external body.

However, if you make a charge for postage which is connected with a supply of goods or services (e.g. posting a report as part of a consultancy service) then the postage charge will have the same liability as the goods or services provided.

Courier charges are VATable, unless the item is going outside the EC in which case they would be zero-rated.

The supply of some printed items are zero-rated whilst others are standard rated. Since May 2020, electronic versions may also be zero-rated, with a small number of exceptions.

See below for a list of some of the zero-rated items and standard items

Lending charges (for example, from a Library) for both printed and electronic zero-rated items are also zero-rated.

There are a number of VAT rates applicable to the sale of food by the University. The underlying principle is that food (not catering) is zero-rated, but some foods, including ice cream, confectionary, non-alcoholic drinks and crisps are liable to VAT at 20%.

NB: Alcohol is always standard rated irrespective of whom it is sold to.

HM Revenue and Customs define catering as food consumed on the same premises at which it is sold, or hot takeaway food. Food that is provided as catering is standard-rated unless the catering is being provided to students.

Food or catering provided to students is exempt as a closely related supply to the education provided, see Supplies closely related to education. Students are anyone who is at the University for a course, seminar or similar, not just under or post grads.

Sandwiches sold for consumption off premises are not classed as catering and should be sold as zero-rated.

Temporary reduced rate of VAT for hospitality (food and soft drinks) until 31 March 2022

See Reduced rate for more information

Advertising sold to another charity is zero-rated as long as the charity you are selling to provides a certificate to claim zero-rating. The certificate should look something like the one shown at Appendix D and must be retained as evidence to support the zero-rating. Sales of advertising to non-charitable organisations are standard rated.

Other universities buying goods from us may claim medical exemption provided that they meet all the conditions. To do so they need to:

• provide the University with a medical exemption certificate; and
• meet the conditions set out in the medical exemption purchasing section of this guide – see goods eligible for medical exemption

Although called 'exemption' for VAT purposes it is actually a zero-rating and the transaction needs to be entered into the Accounts Receivable module on CUFS with the tax code of ZR - Zero Rated

Please see section goods eligible for medical exemption for further information on what supplies are eligible for Medical Exemption. We have a responsibility as a supplier to make sure that goods are eligible for relief before accepting that the exemption certificate can be applied. If a department incorrectly accepts a certificate it will be liable to meet any additional liability.

Domestic fuel or power

Domestic fuel or power is supplied at the reduced rate of VAT. Reduced-rate VAT is a lower rate of VAT payable only on certain goods or services. The current rate for Reduced Rate VAT is 5%.

Contraceptive products

Contraceptive products are supplied at the reduced rate of VAT. Reduced-rate VAT is a lower rate of VAT payable only on certain goods or services. The current rate for Reduced Rate VAT is 5%.

Women's sanitary products

Women's sanitary products are supplied at the reduced rate of VAT. Reduced-rate VAT is a lower rate of VAT payable only on certain goods or services. The current rate for Reduced Rate VAT is 5%.

Temporary reduced rate of VAT for hospitality (food and soft drinks), holiday accommodation and attractions

The Chancellor announced at Budget 2021 that the temporary 5% reduced rate of VAT for certain supplies of hospitality, holiday accommodation and admissions to certain attractions will be extended until 30 September 2021.  From 1 October 2021 the reduced rate for these supplies will be replaced by a new reduced rate of VAT of 12.5% which will remain in effect until 31 March 2022. This impacts supplies that the University makes of food and drink as well as entry to the Botanic Gardens.  The VAT team will be in touch with those it knows are affected by the 5% rate later over the coming months to plan the changes needed to systems to accommodate the new 12.5% rate.  If you think this may affect your activities, please do contact us on vatqueries@admin.cam.ac.uk