If you offer private tuition as a sole trader or small business, you might assume it’s VAT-exempt – but the rules are more specific than many people realise.
A recent First Tier Tribunal case (Rushby Dance & Fitness Centre v HMRC) has provided a helpful reminder of how the exemption works and why not all tuition qualifies.
What the legislation says
Under the Value Added Tax Act 1994 (Schedule 9, Group 6, Item 2), private tuition is exempt from VAT if two key conditions are met:
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The tuition is provided by an individual teacher acting independently of an employer; and
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The subject being taught is one that is ordinarily taught in a school or university.
While the first point is relatively straightforward, the second is where many cases become less clear.
What happened in the tribunal?
In this case, the tutors were providing classes in ballroom dancing, Latin dancing, sequence dancing, and a hybrid of dance and aerobics referred to as ‘dancercise’. They argued that these activities should qualify as VAT-exempt private tuition. However, the tribunal disagreed, ruling that these subjects are not ordinarily taught in schools or universities and therefore do not qualify for the exemption.
Examples of subjects that may or may not qualify
There have been a number of previous tribunal decisions on this issue. For example:
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Subjects that have been accepted as ordinarily taught include horse riding and golf.
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Subjects that have not qualified include yoga, belly dancing, and transcendental meditation.
The distinction depends not on whether a subject can be taught in a school or university, but whether it is commonly part of the mainstream curriculum.
Business structure also matters
It’s important to note that even if a subject qualifies, the VAT exemption only applies when the tuition is provided by an individual, such as a sole trader or partner in a partnership. If the tuition is delivered by an employee or through a limited company, the exemption does not apply.
Why it matters
Incorrectly treating tuition as VAT-exempt could result in backdated VAT liabilities and penalties. If you’re unsure whether your tuition services qualify for the exemption, or how your business structure affects VAT, it’s best to seek professional advice.
At A&C Chartered Accountants, we work with tutors, education providers, and small business owners to ensure VAT is handled correctly and efficiently. If you have any questions about this area, we’re here to help.