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Income Tax (Earnings and Pensions) Act 2003

Section 213: Exception for certain scholarships under trusts or schemes

836.This section, which derives from section 165(3) of ICTA, provides an exception for certain full-time scholarships. This may apply where the scholar is a member of the employee’s family or household but where the scholarship has been awarded on merit and is one which satisfies the conditions of section 331 of ICTA.

837.Subsection (1) derives from the opening words of section 165(3) of ICTA.

838.Subsection (2) derives from section 165(3)(c). It states one of the conditions which must be met for the exception to apply. That condition is that if the opening words of section 201(3) of this Act were disregarded, or the extension to the usual definition of “by reason of the employment” in section 212 were disregarded, the scholarship would not be an employment-related benefit.

839.Subsection (3) derives from section 165(3)(b) and provides the terms to satisfy the condition.

840.Subsection (4) derives from section 165(3)(a). The exception can apply only to scholarships provided from a trust fund or scheme.

841.Subsection (5) derives from the closing words of section 165(3). It ensures that for the exception to apply only a limited amount of the total amount paid out is on scholarships for members of the household or family of employees. The scholarships included are those provided by reason of any employee’s employment. For this purpose subsection (6) explains the meaning of employment.

842.Subsection (6) derives from section 165(6)(b). “Employment” for the purposes of condition D has a special meaning. It includes all employments even if the employee is not resident and not ordinarily resident in the United Kingdom and performs the duties of the employment outside the United Kingdom. It also includes scholarships which are payable by reason of “excluded” employments.

843.Subsection (7) provides definitions of terms used in the section.

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