LPC Grants - Taxable income?

[Cer96]

Hi everyone,

Sorry if this has already been answered, but I couldn't find anything clear either from a quick search on here or a look around the internet/HMRC site in particular! I'm doing my budgeting for transitioning out of life in full time employment and into full time LPC student from September, and came across this issue.

Does anyone know if living cost grants paid during LPC years sponsored by firms are taxable? In the April-September 2021 before beginning the LPC I'll be working full time in a job that'll mean I reach my tax free earnings threshold, then on top of that the grant will be paid to me before April 2022, so will all fall in the same tax year, and I'm trying to figure out if I'll have to pay tax on it.

I appreciate this is quite a specific question, but I can't figure out if the grant falls into 'Educational Grants' or 'Payment for employment' given I suppose I won't have started working for the firm?

Apologies if this is a little too abstract to answer, but if anyone had any insight or resources you could point me to I'd really appreciate it!

 

[Jaysen]

Hi everyone,

Sorry if this has already been answered, but I couldn't find anything clear either from a quick search on here or a look around the internet/HMRC site in particular! I'm doing my budgeting for transitioning out of life in full time employment and into full time LPC student from September, and came across this issue.

Does anyone know if living cost grants paid during LPC years sponsored by firms are taxable? In the April-September 2021 before beginning the LPC I'll be working full time in a job that'll mean I reach my tax free earnings threshold, then on top of that the grant will be paid to me before April 2022, so will all fall in the same tax year, and I'm trying to figure out if I'll have to pay tax on it.

I appreciate this is quite a specific question, but I can't figure out if the grant falls into 'Educational Grants' or 'Payment for employment' given I suppose I won't have started working for the firm?

Apologies if this is a little too abstract to answer, but if anyone had any insight or resources you could point me to I'd really appreciate it!

Hey - I've passed this onto our accountant to see if they can shed any light on this.

 

[Cer96]

Hey - I've passed this onto our accountant to see if they can shed any light on this.

Ah amazing, thanks so much Jaysen.

Can't believe how little explicit information there seems to be on this, given how (presumably) relatively common an issue it must be. Did make me wonder if I'm just overcomplicating it!

 

[Jaysen]

Ah amazing, thanks so much Jaysen.

Can't believe how little explicit information there seems to be on this, given how (presumably) relatively common an issue it must be. Did make me wonder if I'm just overcomplicating it!

Can I check whether this is the full time or accelerated LPC?

 

[Holly]

Can I check whether this is the full time or accelerated LPC?

Is it possible for you to get answers for both?

 

[Cer96]

Can I check whether this is the full time or accelerated LPC?

Full time LPC in my case.

 

[Jaysen]

Is it possible for you to get answers for both?

Sure.

Full time LPC in my case.

He said:

"I can confirm that the employer sponsored grant will be tax free up to an maximum of £15.480 per academic year. The student will have to pay Class 1 NIC on his employment earnings and obviously income tax once above the personal allowance (but only on the employment income)."

I'd just flag that this is based on the limited information I've given him, but it looks like you won't have to worry here!

 

[Jaysen]

Is it possible for you to get answers for both?

There was some uncertainty over the accelerated one -

I think this would make a difference as the stipulation of tax free sponsorship is that (a) the course is full time (tick), (b) you must be enrolled for at least one year (I assume one year is three terms?), and (c) you must attend for at least 20 weeks in the academic year (potentially a tick)

I think I've used up enough of his time, but hopefully that provides some guidance!

 

[Holly]

There was some uncertainty over the accelerated one -

I think this would make a difference as the stipulation of tax free sponsorship is that (a) the course is full time (tick), (b) you must be enrolled for at least one year (I assume one year is three terms?), and (c) you must attend for at least 20 weeks in the academic year (potentially a tick)

I think I've used up enough of his time, but hopefully that provides some guidance!

Thank you Jaysen, much appreciated!

 

[Daniel Boden]

Hi everyone,

Sorry if this has already been answered, but I couldn't find anything clear either from a quick search on here or a look around the internet/HMRC site in particular! I'm doing my budgeting for transitioning out of life in full time employment and into full time LPC student from September, and came across this issue.

Does anyone know if living cost grants paid during LPC years sponsored by firms are taxable? In the April-September 2021 before beginning the LPC I'll be working full time in a job that'll mean I reach my tax free earnings threshold, then on top of that the grant will be paid to me before April 2022, so will all fall in the same tax year, and I'm trying to figure out if I'll have to pay tax on it.

I appreciate this is quite a specific question, but I can't figure out if the grant falls into 'Educational Grants' or 'Payment for employment' given I suppose I won't have started working for the firm?

Apologies if this is a little too abstract to answer, but if anyone had any insight or resources you could point me to I'd really appreciate it!

I would have thought they would count as an educational grant which aren't taxable given they're purely for support purposes whilst we're studying and vaguely remember reading a link that confirmed that let me see if I can find it.

Edit 1: Just seen @Jaysen's response which seems to confirm that so we're all good it sounds like

Edit 2: Here's the link confirming the above:

Training | Low Incomes Tax Reform Group

On this page, we look at the tax position of training that your employer provides for you. Depending on the type of contract you have, payments made

www.litrg.org.uk

 

[Cer96]

Amazing, this has very much cleared up a major source of confusion.

Thanks so much for your help @Jaysen, and for the useful link @Daniel Boden!

 

[Jaysen]

I would have thought they would count as an educational grant which aren't taxable given they're purely for support purposes whilst we're studying and vaguely remember reading a link that confirmed that let me see if I can find it.

Edit 1: Just seen @Jaysen's response which seems to confirm that so we're all good it sounds like

Edit 2: Here's the link confirming the above:

Training | Low Incomes Tax Reform Group

On this page, we look at the tax position of training that your employer provides for you. Depending on the type of contract you have, payments made

www.litrg.org.uk

Great find!

 

[HorsesForCoursesNeighNeighNeigh]

Oh this is AMAZING thanks so much! Will make a huge difference to my budgeting if I get a TC

 

[MzM]

Would just like to say quickly that if you are a US citizen - then these are (afaik) taxable as part of your income !

But can be excluded by various means etc etc etc (talk to an accountant)