By Tolley in association with Philip Rutherford

The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Scholarships
  • Introduction
  • Scholarships
  • Reporting requirements


A number of employers make educational awards to individuals. For the individuals receiving the award, there is an exemption from tax in most instances. However, depending on the relationship between the individual and the employer, there may be a taxable benefit arising.

The main purpose of the legislation is to ensure that employers are not providing a benefit to employees by meeting the employee’s child’s education costs. If these amounts had been provided by way of cash to the employer then it would have been taxable, therefore meeting their child’s school costs on their behalf should equally be taxable.

ITEPA 2003, ss 211215

There are a number of scenarios to understand when looking at the taxable status of the payments.

HMRC’s guidance on scholarship income is at EIM06205.

The scholarship holder is a third party to the employer

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