EIM06235 - Employment income: scholarship income: scholarship and apprenticeship schemes at universities and colleges
Statement of Practice 4/1986
Overview
Statement of Practice (SP) 4/86 was published in 1986. It
explained the, then, Inland Revenue’s view of the application
of Section 776 IT(TOI)A 2005 (Section 331 ICTA 1988) to students
who were either sponsored by their employers to undertake full time
higher educational course or were on sandwich courses under the
terms of which they were required to work for the employer during
vacations and at other times.
The Practice is an administrative easement. If students or
trainees satisfy the conditions it is accepted without further
question 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.
A rewritten version of SP4/86 was published with effect from
5 April 2005 (see
EIM06236).
A further rewritten version was published on 15 August 2007
with effect for the academic year 1 September 2007 to August 2008
and subsequent (see EIM06237).
Periods up to and including 5 April 2005
Where an employee is released by his or her employer to take a full-time educational course, including a sandwich course at a university, technical college, or similar educational establishment, payments made to the employee for periods of attendance at the educational establishment (but not for periods spent at work whether during vacations or otherwise) may be treated as exempt from income tax where:
- the period for which the employee is enrolled at the educational establishment is at least one academic year, and his actual full-time attendance at that establishment during that period amounts on average to at least 20 weeks per year
and
- the rate of payment, including lodging or subsistence allowances, does not exceed the higher of:
- the appropriate amount shown in the table below (see EIM06240), exclusive of university etc fees payable by the employee
or
- the rate of payment which an individual in similar circumstances would have received as the recipient of a grant from a public awarding body (for example, a studentship from one of the research councils).
This latter limit may be more favourable for employees with family responsibilities. PAYE Technical with the papers and a note of the employee's date of birth.
