Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

VAT Government and Public Bodies

Local authority education services: related activities: grants for students on training courses

Local authorities can provide grants to students attending further education to cover the cost of such things as tuition, board, lodging and other necessary expenses. The payment of these grants may sometimes be split, with part being paid directly to the training establishment to cover the cost of tuition and part being paid to the student. On other occasions the total grant may be paid to the student.

If a grant is given, regardless of how payment is actually made or to whom, it is important to realise that it does not represent payment for any supplies made to the local authority. The supplies bought with the grant are made to the student; with the local authority simply assisting the student financially.

Because the supplies are made to the student, rather than the local authority, there is no entitlement to VAT recovery by the local authority. This remains the case even where the authority is billed direct for any of the supplies in question.