The University is exempt from most direct taxes by law, and to partial relief on others such as Stamp Duty Land Tax. However, this is dependent upon the otherwise assessable income relating wholly to primary purpose charitable activity.
The Finance Act 2006 introduced substantial anti avoidance legislation to prevent the abuse of such charitable exemption. This reinforces existing governance principles for the University to conduct any non-primary purpose activities under non-charitable subsidiaries, and new obligations to police the transactions with substantial donors in order to maintain its exemption from Corporation Tax.
Non-primary purpose activity might constitute either a commercially run trading activity (such as non-student lettings) or a simple cost (including 'non-qualifying' investments). Both must be excluded from the University's accounts, and it is a feature of the legislation that non-charitable costs would otherwise attract a liability to Corporation Tax in a similar manner to trading profits.
This principle relies upon demonstrable arm’s length pricing of transactions between the University and its subsidiaries to prove the accounting integrity, and which also extends to transactions with 'substantial donors'.
Foreign Tax Exempt
Explanatory note to accompany W-8EXP certificates
The University of Oxford is registered in the US as a ‘foreign tax exempt’ organisation, and routinely files annual tax returns that are published in the public domain. The W-8EXP certifies this tax status and has indefinite validity on the strength of holding a registered Taxpayer Identification Number. This level of assurance is far stronger than the US-UK [Double Tax] Treaty benefits that must otherwise be used by UK resident bodies using Form W-8BEN.
IRS Notification Letter 1990 (DOC)
W-8EXP Form - Feb 2019 (PDF)
Explanatory note to W-8EXP (PDF)
Other Direct Taxes
Please contact the Payroll Team for issues concerning employment tax or the Tax Team for all other queries.