Last week, representatives of the H E sector met with HMRC and a research organisation instructed by HMRC, to discuss HMRC’s current guidance on the use of the scholarship income exemption. Within those talks, these main points arose:
- There is clear confusion between the two separate potentially taxable aspects of stipend awards
- Current HMRC guidance is not written with the higher education sector in mind
- HMRC are not necessarily clear on the avenues of payment received by universities from funding bodies
- Having an ‘exempt’ figure is meaningless for the H E sector if the main funding body’s minimum stipend rate exceeds the exemption
- Making part-time students taxable on stipends appears to be missing the point and ignores the pro-rata stipend payments paid by funding bodies
- Not allowing some education to be taken away from an educational establishment weakens the ability for some universities to attract suitable students, e.g. veterinary studies where a veterinary practice is not onsite
We are now awaiting HMRC’s feedback from these meetings in terms of changes to their guidance. BUFDG will push for more H E focused guidance, along with changes to the how the exemptions are no longer fit for purpose.
When updates are available, we will post messages in the Stipends – BUFDG Updates Board discussion board.
21 March 2023 
Julia Ascott, Employment Taxes Specialist
