EIM06215 - Employment income: scholarship income: scholarship and apprenticeship schemes at universities and colleges

Statement of Practice 4/86

Overview

Statement of Practice (SP) 4/86 was first published by the (then) Inland Revenue in 1986. It explains the (now) HMRC’s view of the application of (now) Section 776 IT(TOI)A 2005 to income received by students who are either sponsored by their employers to undertake a full-time higher educational course or are on sandwich courses under the terms of which they are required to work for the employer during vacations and at other times.

For the full text see EIM06220.

The Practice is an administrative easement. It does not provide exemption from income tax. That derives from section 776, which applies to income from a scholarship. If students or trainees satisfy the conditions it sets out, HMRC accepts without enquiry that the income paid by their employer to maintain them while studying is scholarship income within the meaning of Section 776. This procedure relieves all parties from having to undertake detailed scrutiny of the legal relationships.

The current version of SP 4/86 was published on 15 August 2007 taking effect for the academic year 1 September 2007 to August 2008 and subsequent years.

For limits applying in relation to earlier periods, see the table at EIM06225.