Income Tax (Earnings and Pensions) Act 2003 section 213

Exception for certain scholarships under trusts or schemes

Section 213 provides an exemption from the employment-related benefits charge for certain scholarships awarded to full-time students through trust funds or schemes, provided four conditions are satisfied.

• The scholarship must not be one that would ordinarily be treated as provided by reason of the employment — it should be awarded on its own merits rather than simply because of the employment connection.
• The scholarship holder must be a full-time student at a university, college, school or other educational establishment.
• The scholarship must be provided from a trust fund or under a formal scheme, not paid directly by the employer outside such an arrangement.
• In the relevant tax year, no more than 25% of the total payments made from the fund or scheme for full-time student scholarships may be attributable to scholarships provided by reason of any person's employment.