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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Employment income: scholarship income: rates of payment under Statement of Practice 4/1986

Statement of Practice 4/1986

The exemption under Statement of Practice 4/86 (see EIM06235) is due where the rate of payment does not exceed the amount shown in the table below.

Period Maximum rate (£) Maximum rate (£) Maximum rate (£)
       
  Yearly Monthly Weekly
From 6/4/92 7,000 583.33 134.61
From 01/09/05 15,000 1250.00 288.46
From 01/09/07 15,480 1290.00 297.92
       

For 1991/92 and earlier years, see SE06207.

Where the rate of remuneration (inclusive of lodging or subsistence allowances, but exclusive of university etc fees payable by the employee) 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 instruction 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 EIM06245.

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Periods up to and including 5 April 2005

For periods before 6 April 2005 the upper limit for the purposes of SP 4/86 was the higher of:

the appropriate amount shown in the table above, 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. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)