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HMRC internal manual

Double Taxation Relief Manual

Non-residents: UK income: Visiting students and apprentices

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

  1. 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.
  2. 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.
  3. 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.
  4. 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.