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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Benefits: scholarships provided for members of the family or household of a director or employee: fortuitous scholarship awards do not give rise to a chargeable benefit

Section 213 ITEPA 2003

There is no chargeable benefit where the connection between the award of thescholarship and the employment is fortuitous. An award of a scholarship is treated asfortuitous if in any year of assessment:

  • the scholarship is provided from a trust fund or under a scheme and
  • it is held by a person receiving full time instruction at a university, college, school or other educational establishment (see EIM06204) and
  • it would not be regarded as provided “by reason of a person’s employment” within the ordinary meaning of that phrase as at 1 of EIM30002 (this means that 2 and 3 of EIM30002 are ignored for this purpose) and
  • not more than 25 per cent of the payments from that fund or scheme are attributable to scholarships provided by reason of persons’ employments. For this purpose the meanings of “by reason of the employment” at 1, 2 and 3 of EIM30002 do apply. The meaning of employment is extended to include an office or employment whose earnings are not liable to UK tax, but would be liable if:



  • the employee were resident or ordinarily resident in the United Kingdom and
  • all the duties were performed wholly in the United Kingdom.