Trainee educational psychologists are engaged under contracts of
training for all or part of their training depending on the
Programme under which they were trained. While engaged on a
training contract they receive educational maintenance grants.
These are not earnings for income tax or NICs purposes.
Statement of Practice SP4/86 is not relevant to these
trainees as they are not employed by the host local authority (see
below).
If a training grant is subjected to PAYE or has Class 1 NICs
accounted for in error you should obtain all of the papers and
process the repayments. See Business Guidance Note BGN005/07.
Trainees under this Programme entered into a training contract
with the Local Government Employers (LGE) (previously the
Employer’s Organisation for Local Government). Trainees were
usually serving teachers or local government officers. They were
required to resign from their teaching jobs and appointed to
“host” local education authorities (LEAs) as trainees
for 1 academic year (1 September to 31 August following). During
the year trainees were required to complete a course of university
study leading to the award of a Masters Degree in Educational
Psychology.
The “host” local authority issued contracts of
employment to the trainees and paid what they believed to be
salary.
HMRC reviewed the arrangements in 2005 and decided that the
trainees were engaged under contracts of training. Trainees who had
participated in this Programme have or are having repayments of
income tax and NICs.
The previous Programme required trainees to study for 1 year and
obtain a Masters degree in Educational Psychology. The 2006
Programme lasts for 3 years and requires candidates to obtain a
Ph.D.
In Year 1 the trainees are engaged under contracts of
training and hosted by local authorities in similar fashion to the
earlier programme. They attend university full time and may
undertake placements in local authority educational psychology
units. They are paid training allowances that are not earnings for
tax and NICs purposes.
In Years 2 and 3 trainees are required to obtain employment
with local authorities as trainee educational psychologists. They
are required to attend university for part of the term-time weeks.
On other days they perform services for their employers. Payments
received from employer local authorities in Years 2 and 3 are
earnings and should be subjected to PAYE and have Class 1 NICs
deducted and accounted for.
