In certain circumstances your employer may be able to make payments to you free of tax and NICs when you are taking a full-time course, including a sandwich course, at university or technical college. Your employer would be making such payments to support you while you are studying full-time and not for when you are working at your job.

To qualify for the exemption from tax and NICs you must satisfy the following conditions:

• be receiving full-time instruction at a university, technical college or similar educational establishment which is generally open to the public and offers more than one course of practical or academic instruction; and



• be enrolled for at least one academic year; and



• attend the course for at least twenty weeks in that academic year or if the course is longer you must attend for at least an average of twenty weeks in an academic year;

If all of these conditions are met your employer may pay you up to £15,000 tax and NIC free for the 2010/11 academic year commencing on 1 September 2010 to cover the periods while you are studying. Such payments would cover lodging, subsistence and travelling allowances but tuition fees are excluded from the exemption.

The monetary value of the exemption will be reviewed annually.

If your employer were to agree with you that you would receive more than £15,000, whether in one lump sum or instalments, the whole of the sum would be subject to tax and NICs and the exemption would not apply.

However, if, part way through the course, your employer increases the amount for some reason, perhaps because of a general pay rise for example, so that the total amount will exceed the £15,000 limit, the whole of that later payment would be taxable and NICs deductions would also be due. If you had already received one or more payments within the limit earlier in your course they would not be affected and you would not have to pay tax or NICs on these payments.

For more information we suggest you visit the Revenue website which has a lot more very useful detail. You can find:

• A simple introduction



• Information about your state benefits which may be affected if your employer makes payments which are tax and Class 1 NICs exempt which you can find in Potentially affected state benefits



• Voluntary (Class 3) National Insurance contributions - information to help you decide whether protecting your right to a basic State Pension and Bereavement Benefit is the right thing for you to do