HomeEmployer-sponsored courses
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There are lots of ways that you can get funding for your studies through bursaries, grants and loans.
Sometimes you might also get help from an employer if the course is relevant to a job that you are doing or have been offered (upon your graduation, for example).
Some employers may only award sponsorship for the final year of study. However, some employers will fund all of your studies from the first year onwards if you have impressed them while on a vacation or work experience placement, for example. So it follows that this could cover some time studying or working abroad.
Typically, such payments are not taxable – either in the UK or overseas, due to international agreements which say that overseas students, visiting a country solely for full-time education or training, will not pay tax on income payments from sources outside that country for their maintenance, education or training. There is more information in the HMRC manual on the GOV.UK website.
However, there are some specific rules around the UK tax treatment of employer sponsorship payments (sometimes called scholarships) that are worth noting:
Under the rules, your employer may be able to make payments to you free of tax and NIC to support you while you are studying full-time. This exemption does not apply when you are working at your job, such as if you go back to work during vacations. Your earnings for those periods will be subject to tax and NIC as usual.
To qualify for the exemption from tax and NIC you must:
- be studying full-time at a university, technical college or similar educational establishment that is generally open to the public and offers more than one course (so an employer's ‘in-house’ training would not qualify);
- be enrolled for at least one academic year;
- attend the course for at least 20 weeks in that academic year or, if the course is longer, you must attend for at least an average of 20 weeks in an academic year.
If all of these conditions are met and your studies continue, your employer is allowed to pay you up to £15,480 tax and NICs free for the 2020/21 academic year, that is, from 1 September 2020.
The £15,480 total includes accommodation, living and travel costs, but tuition fees do not count towards the limit. Tuition fees are separately exempt as long as the course is ‘work-related training’, which means it will help you do your job better or is for a qualification relevant to your job.
More information and examples can be found in the HMRC manual on the GOV.UK website.
