Are Stipends Taxable In The UK?
If you are interested to learn whether stipends are taxable in the UK, you will find guidance in the following blog post that aims to answer this question. While we will mainly discuss the relationship between taxable incomes and stipends, we will also explore who can get a stipend and compare to see if a stipend is better than a salary.
Are Stipends Taxable In The UK?
No, stipends are not taxable in the UK. Stipends are awarded either by the Government or universities as a means of upkeep against services rendered and are treated under Section 776 IT(TOI)A 2005.
The most common form of stipends are payments made to PhD students against the research they undertake as part of their course.
This means that stipends awarded under research studentships and advanced course studentships given for the maintenance of students who are in training for research methods or studying under post-graduate courses are not liable for tax in the UK.
In addition to this, if you receive a stipend, you are also not also liable to make National Insurance contributions for the amount. This applies to all forms of stipends a Research Stipend, Education Stipend or Training Stipend.
However, income from employment that is taxable in the UK includes the following:
Income from self-employment is also taxable. Other types of taxable income include the following:
- dividends from investments
- rental income
What Is The Minimum Stipend You Can Earn In The UK?
According to UK Research and Innovation (UKRI), the minimum stipend was increased in 2022 to £17,668. This is a 10% increase on the previous minimum stipend level of £16,062 and applies to students enrolled in their PhD program.
This applies whether you are a UK citizen or an international student undertaking a PhD course in the UK.
Stipends are generally paid to the following in exchange for the services they render:
Is It Better To Be On A Stipend Than A Salary?
Whether or not it is better to be on a stipend than a salary depends on your circumstances. For instance, if you are a student you might be able to pay for your expenses with a stipend. However, if you are a full-time worker, a stipend will not be enough to meet your living costs and you will find yourself to be better off on a salaried job.
Stipends are usually lesser in amount than a salary and are mostly intended for employees on training, interns or students. There is no requirement for a stipend to meet the minimum national wage. On the other hand, the salary or wages for a full-time or part-time worker respectively should meet the national minimum wage level.
Salaried employees have more responsibilities than those claiming a stipend. This also justifies why salaries are higher than stipends.
While a salary can be performance-based and remain open for negotiation after some time, stipends remain fixed for the entire duration of the course and cannot be negotiated upon.
The above discussion helps to conclude that stipends in the UK are not a taxable form of income. The main reason for this could lie in the fact that stipends are usually smaller amounts of payments (in comparison to a salary), paid mostly to PhD students for the research work they undertake.