VATEDU55530 - Group 6 Item 5 Education or Vocational training: Treatment of Advanced Learner Loans

Advanced Learner Loans are provided under a contract between the student and the Secretary of State for Education which is administered by Student Finance England. The loan is repayable by the student in accordance with the regulations in force at the time repayments are due. They are subject to an interest charge payable by the student on the repayments over time.

Advanced Learner Loans are not treated as consideration for a supply that is ultimately funded by the Secretary of State; because they are loans to students which are repayable by them in the event that they meet certain conditions. Their VAT treatment is therefore the same as student loans.

Consequently, receipt of the Advanced Learner Loan by the education provider doesn’t result in the that part of the consideration 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 provider’s full charge for the education it provides to the student.

The exception to this treatment 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 the consideration for their supplies of education and closely related services regardless of how they’re funded.