Income from a scholarship (see E4.325) is exempt from income tax1.
If, however, the scholarship has been provided by reason of someone else's employment, the exemption applies only to the scholarship holder2 (see E4.325). The employee by reason of whose employment the scholarship was provided normally falls within the scope of the benefit rules, subject to the 'family' and 'fortuitous' scholarship exemptions discussed below. The scholarship benefit is taxed under the residual charge provisions3. For HMRC guidance, see EIM30001–EIM30008. For a case where the First-tier Tribunal upheld HMRC's interpretation of these provisions, see Kutcha v HMRC4.
In practice, certain scholarships provided to employees enrolled on a full-time course are also excluded from income tax5 (see E4.325).
A scholarship includes
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