Tax/NI on Scholarships

Former Member

I'm desperately hoping someone here can help me out, or at least point me where to try and get the answers as I know I can't take message board advice as gospel.

I've been awarded a £2000 scholarship/award for the final year of my degree. The nice company that are giving me it have in their infinite wisdom given the money to the university to pass on.

The university now want to treat it as taxable income and thus deduct both tax and NI from it. Now I'm pretty sure as it's an award/scholarship not pay for employment and I'm in full time education for the duration of the tax year they shouldn't be doing either.

Can anyone shed any light on this and give me some clues where to look to prove it to them? I'd quite like to get it sorted before they pay it to me, as I'm pretty sure trying to reclaim it back afterwards after the university have classed it as income is going to be a nightmare.

Former Member

Is this your only income, ie you dont have another job? Then you shouldnt really get taxed on it.

Former Member

I've got a summer job and the combination of the award, the summer job and the outreach work I do is likely to push me over the lower personal allowance by about £80 this tax year.

The question is mainly should the award count as taxable income, because I'm pretty sure it doesn't (partly because every other university has just handed over the grand total, it's just mine that's being silly).

Former Member

Scary Monster wrote: »

I've got a summer job and the combination of the award, the summer job and the outreach work I do is likely to push me over the lower personal allowance by about £80 this tax year.

The question is mainly should the award count as taxable income, because I'm pretty sure it doesn't (partly because every other university has just handed over the grand total, it's just mine that's being silly).

I would personally give an accountant a call, or even perhaps the tax office.

Former Member

Educational grants and scholarships are exempt from income tax.

Attached is the relevant extract from The CAB's Advisernet electronic information system.

Former Member

You are in fact a star, thank you very much.

And just to check, am I right in thinking that if it's exempt from income tax then it's also exempt from NI deductions?

Former Member

Scary Monster wrote: »

And just to check, am I right in thinking that if it's exempt from income tax then it's also exempt from NI deductions?

Thats the general rule, and is right (afaik) for educational grants.