Expenses and benefits: scholarship for an employee's family member
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1. Overview
As an employer providing scholarships for your employees鈥� family members, you have certain tax, National Insurance and reporting obligations.
This also applies to exhibitions, bursaries and other educational endowments.
2. What's exempt
You don鈥檛 have to pay or report anything if the scholarship is 鈥榝ortuitous鈥�. This means that there鈥檚 no direct connection between the employee working for your business and their family member getting a scholarship.
A scholarship is fortuitous if all the following apply:
- the person with the scholarship is in full-time education
- the scholarship would still have gone to that person even if their family member didn鈥檛 work for you
- the scholarship is run from a trust fund or under a scheme
- 25% or fewer of the payments made by the fund or scheme are for employment-linked scholarships
3. What to report and pay
If the scholarship isn鈥檛 exempt, you must report it to HM Revenue and Customs (HMRC) and may have to deduct and pay tax and National Insurance on it.
You must:
- report it on form P11D
- pay Class 1A National Insurance on the cost of providing the scholarship
4. Technical guidance
The following guides contain more detailed information: