EIM06235 - Employment income: scholarship income: meaning of full time education

Section 776 IT(TOI)A 2005

There is no statutory definition of “full-time education” so the expression takes the ordinary meaning. Education will be classed as full-time where the individual is signed up to undertake a study course as the principal activity. It may be distinguished from a study course operating on (say) day release and with the employee working normally on the other days of the week.

Individuals registered as full-time students at educational establishments on courses up to, and including, university undergraduate and comparable levels may normally be regarded as receiving full-time education for the purposes of the scholarship exemption under Section 776 (see EIM06205).

Certain university and college courses, notably sandwich courses, require students to undertake periods of work experience away from the university, etc. during the course. If there is an educational award (scholarship), it is likely to be suspended during such periods. Instead the student receives his or her salary or wages from the employer. These are taxable earnings to which PAYE should be applied in the normal way, if appropriate. No exemption arises under Section 776, as the student will not, during the period of work experience, be in full-time education at the educational establishment.

See EIM06215 as regards students released by employers to undertake educational courses.

University graduates registered as full-time students for the degree of Ph.D. or equivalent may normally be regarded as receiving full-time education on the grounds that their research work is subordinate to the main object of acquiring training in research methods. This will still apply even if they undertake small amounts of paid work, for example, teaching or demonstrating.