Regulation 25 and paragraph 12 of Part VII of Schedule 3 to the Social Security (Contributions) Regulations 2001


Legislation was introduced with effect from 6 April 2005 to disregard from the calculation of earnings for Class 1 NICs purposes payments of scholarship income to an employed earner while they are receiving full-time instruction at a university, college, school or other educational establishment. The legislation broadly aligns the NICs position with the income tax exemption allowed by section 776 of the Income Tax (Trading and Other Income) Act 2005 (previously section 331 of the Income and Corporation Taxes Act 1988) supplemented by HMRC's Statement of Practice SP4/86.

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