Partial exemption - education

A framework that provides guidance on Partial Exemption (PE) for Higher Education Institutions (HEIs) has been made available by HMRC. It is stated that it will assist in: 

  • Determining a fair value for supplies of grant-supported education; 
  • Determining when to add sectors to a PE method; and, 
  • Identifying and deal with distorting supplies.

It considers the areas that cause the greatest confusion, including funding grants, and the capital goods scheme.

In the section on teaching support grants it discusses grants and the Transparent Approach to Costing system (TRAC) method available and illustrates how certain PE methods might work in practice.

In the section HEIs and the ‘Capital Goods Scheme’, it explains the options available. It also provides a useful example of buildings usage. It highlights a scenario where usage changes over time.