Scholarships for employees’ family members

If you provide scholarships for your employees’ families, we tell you what HMRC need to know

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

Do you need to report scholarships to HMRC?

Generally speaking, if you as an employer provide scholarships for any family members of your employees, you will need to report this to HMRC and as a result, may have to deduct and pay more PAYE tax and National Insurance.

For HMRC purposes, scholarships also include any bursaries, exhibitions or other educational endowments which you provide for your employees’ family members.

Family members are considered to be any of the following:

  • The husband, wife or civil partner of the employee
  • The employee’s children and their spouses or civil partners
  • The parents of the employee
  • Any dependents of the employee

Are there any exemptions?

If HMRC consider the scholarship to be ‘fortuitous’, there is no need to report or pay anything to HMRC. By ‘fortuitous’ HMRC mean that there isn’t a direct connection between your employee working for your company and their relative gaining this scholarship. To be considered fortuitous by HMRC, the scholarship has to meet all of the following conditions:

  • If the person receiving the scholarship is in full-time education
  • If the person receiving the scholarship would still have received it even if their family member didn’t work for your business, so it can’t be considered a ‘perk’ of the job
  • If the scholarship is run under a scheme or trust fund
  • If 25% or fewer of the payments that the scheme or trust fund make are for employment-linked scholarships

The scholarship has to meet all of these conditions to be exempt from HMRC reporting purposes.

How do you report to HMRC and pay?

If the scholarship that your company provides isn’t considered to be fortuitous and therefore exempt by HMRC then you need to report this to HMRC on your P11D form. You will also have to pay Class 1A National Insurance on the cost of the benefit to your company.

How can DSR Tax Claims help?

We know that reporting employee benefits to HMRC can be a complicated affair, even with our helpful guide to tell you everything you might need to know. It’s all very well reading about it and knowing what HMRC’s stand on it is – but how do you apply that to your own circumstances? It can seem like an absolute minefield but help is always available and you don’t need to battle through this alone. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

This page was last updated on 07/11/2018.

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