Further education colleges and providers will be in scope for a new tax on international higher education students that will cost £925 per learner, according to a consultation published today.
The levy will apply to any international student on a course at level 4 or above at a provider registered with the Office for Students.
Published alongside the budget this afternoon under the title “international student levy technical detail”, consultation documents say the tax will be collected by the Office for Students, take effect from the 2028 academic year and increase in line with inflation.
Providers will not be charged on the first 220 students, equivalent to the first £200,000 of levy liabilities, in recognition of the “administrative burden” of paying it and the “disproportionate impact” the policy could have on smaller providers.
An impact assessment published alongside the consultation estimates that the overall revenue generated will start at £445 million in 2028-29 and rise to £480 million by 2030-31.
However, it estimates that this will be partially offset by increased income from tuition fees.
Emma Meredith director of skills policy and global engagement at the Association of Colleges said: “An exemption for the first 220 international students is a welcome step as AoC data indicates many colleges recruit smaller international cohorts.
“The government has had difficult financial decisions to make, and the reintroduction of targeted maintenance grants will support the most disadvantaged students, including for the first time those taking courses at Levels 4 and 5: support that is critical to delivering the Prime Minister’s commitment for two-thirds of young people to undertake higher-level learning.”
The DfE’s college accounts data for 2023-24 academic year suggest that income from international students’ tuition fees across 46 English colleges was about £22 million.
Colleges with the highest levels of international student fee income include NCG, which earned £2.9 million, New City College, which brought in £2.6 million, and Chichester College Group, which had an income of £2.1 million.
‘Share the benefits’
Announced in the immigration white paper earlier this year, the government said the levy would “share the benefits” of the estimated £20.65 billion generated by overseas students at UK universities.
The government added that the income will be “fully reinvested into the higher education and skills system”, including by funding targeted maintenance grants, progression through the post-16 system, “and for wider skills”.
It argues that while the government “welcomes and values” overseas students’ contribution to UK society, it is “right” to ensure the financial benefits help the most disadvantaged students.
Details about how it is spent will be set out at the next spending review.
Questions in the DfE consultation are targeted at HE providers and tax professionals, and focus on its “proposed design and delivery”.
The consultation closes on February 18 next year.
University and College Union general secretary Jo Grady said called the tax a “regressive levy” on a crisis hit university sector.
She added: “This new tax on education will do more harm than good and undermines the vital contribution international students make.
“Labour is echoing Reform by scapegoating migrants instead of addressing the real, deep-rooted challenges facing higher education.”
Your thoughts