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HMRC internal manual

Employment Income Manual

Benefits: scholarships provided for members of the family or household of a director or employee: extended meaning of

Section 212 ITEPA 2003

A scholarship is provided “by reason of a person’s employment” if:

  1. it falls within the ordinary meaning of those words (see EIM20503), or
  2. it was provided by the person’s employer (see EIM20502), or
  3. it was provided under arrangements entered into by his employer or a person connected with his employer whether or not the arrangements require the employer or a connected person to contribute directly or indirectly to the cost of providing the scholarship.

“Connected person” has the meaning given in Section 839 ICTA 1988 (see CG14580 onwards).

Many scholarship schemes take the form of educational trusts set up by the employer or a third party. They are arrangements, which can give rise to chargeable benefits. They do so if scholarships are awarded to an individual who is a member of a director’s or employee’s family or household by reason of the employment of that director or employee.