The latest Budget brings the International Student Levy into focus, with financial and planning implications for higher education providers.
What’s changing?
The Government has reiterated its plans to introduce a levy on international student income, with eligible higher education providers in England required to pay £925 per international student per year from 1 August 2028, with an allowance for the first 220 students.
With implementation approaching, the latest Budget is a timely reminder for providers to assess the potential financial implications, particularly those with a significant reliance on international student fees, and factor the levy into future financial planning and recruitment strategies.
What should you be thinking about?
- International fee dependency: Assess how reliant your institution is on international student income and model the potential impact of changes in recruitment, student numbers and fee income on your overall financial position.
- Forecasting and stress testing: Run scenarios to understand how changes in international recruitment and the levy could affect budgets, cash flow and financial forecasts. Identify where falling income could create pressure on staffing, investment or planned activities.
- Financial sustainability: Consider the wider implications for your institution’s financial resilience, including whether current cost structures remain sustainable, where income could be diversified and what contingency plans may be needed to protect long-term financial health.
Overseas services: Changes to the VAT reverse charge
From April 2027, the government will reform the VAT reverse charge for business-to-business services purchased from overseas suppliers.
Under the new rules, the reverse charge will apply only where the UK recipient is VAT-registered. Overseas suppliers will instead need to charge UK VAT on relevant services supplied to UK organisations that aren’t VAT-registered.
What could this mean for your organisation?
- Increased costs: If your organisation isn’t VAT-registered, you could face additional VAT costs on overseas services, such as cloud software, digital subscriptions and consultancy.
- VAT registration requirement: Consider if this impacts any VAT registration requirements that may have arisen due to the previous reverse charge rules.
- Review your suppliers: Identify the overseas services your organisation uses and consider how the changes could affect your costs.
- Plan ahead: Factor any potential additional VAT costs into your budgets ahead of April 2027.
What’s next?
Our tax experts have taken a closer look at the announcements and their implications in our full Autumn Budget summary. Read the full version here.
