Income Tax (Earnings and Pensions) Act 2003 section 211

Special rules for scholarships: introduction

Section 211 introduces the special rules that apply when scholarships and similar educational awards are connected to a person's employment.

• Where an employer or a connected person arranges a scholarship, it is treated as being provided by reason of the employment, making it potentially taxable as an employment-related benefit.
• Certain scholarships provided through a trust fund or a formal scheme are exempt from the employment-related benefits charge under specific conditions.
• Where a scholarship is paid from a trust fund and counts as an employment-related benefit, there is a special method for working out the cost of that benefit.
• The normal income tax exemption for scholarship income is restricted where the scholarship amounts to an employment-related benefit.