Most double taxation agreements provide that students and
business apprentices who visit the United Kingdom solely for the
purpose of their education or training and who, immediately before
coming here, were residents of the other country shall be exempt
from United Kingdom tax on payments which they receive from outside
the United Kingdom for their maintenance, education or training.
Some agreements also provide that certain remuneration which
a student or business apprentice receives from employment in this
country shall be exempt from United Kingdom tax. Various
limitations are imposed in particular agreements, often relating to
monetary limits, the student's need to supplement grant income, or
the type of employment. In every case when an agreement provides an
exemption of this type, details of any limitations are given in
Part IV of this volume.
Claims for exemption under a students' Article are dealt
with in the District which, but for the agreement, would have dealt
with any tax on such payments or remuneration. In examining claims,
refer to the relevant double taxation agreement to ensure that the
conditions for exemption are fulfilled. The following notes give
some guidance on matters to be taken into account in considering
whether exemption is due
a} The exemption does not extend to income or capital gains derived by a student or business apprentice from his own investments or from trust income to which he is absolutely entitled.
b) Whether payments or remuneration are for the student's etc. maintenance, education or training, or for supplementing his resources, or are reasonably necessary, is a question of fact and the onus is on the claimant to provide the evidence. The figures quoted in Statement of Practice SP4/86 (see SE1314) can be used as a guide. Where the payments or remuneration seem to be unreasonably high, refer the case to Personal Tax Division (Schedule E), Sapphire House, Sollihull.
c) If the payments or remuneration exceed the amount needed for the student's etc. maintenance, education or training, the whole amount is taxable and not merely the excess.
d) Where the Article provides that remuneration is to be exempted up to a certain monetary limit and the student or business apprentice is resident in the United Kingdom under United Kingdom domestic law, that amount is additional to the personal allowances available under United Kingdom law. For example, if the monetary limit in the agreement is 1,000 and the claimant is entitled to a personal allowance in the relevant year of 3,445, earnings of 4,445 or less will be exempt.
Refer any other points of doubt or difficulty to Personal Tax Division (Schedule E), Sapphire House, Solihull.
