EIM06225 | Employment income: scholarship income: rates of payment under Statement of Practice 4/86

Statement of Practice 4/86

The exemption under Statement of Practice 4/86 (see EIM06220) is due where the rate of payment does not exceed the amount shown in the table below.

Where the rate of remuneration (inclusive of lodging, subsistence and travelling allowances, but exclusive of fees payable by the employee to the university etc.) exceeds the limits set out above, do not accept that the trainee/student is in receipt of scholarship income. You should obtain copies of contracts between the trainee/student and the employer/sponsor and an explanation of how the level of payments has been calculated. It is likely that the amounts exceed what may genuinely be described as scholarship income or educational maintenance. In consequence the payments are likely to be earnings from the employment and should be taxed in full. However, an increase in the rate of remuneration beyond the qualifying limit part way through a course, will not affect any entitlement to exemption for the earlier part of the course. Similarly, a period of full-time education at a rate of payment not qualifying for exemption counts as a period of attendance at the educational establishment for the purpose of deciding whether the employee was in full-time attendance at the establishment.

For examples of how the exemption operates see examples EIM06240.