Apprenticeship bursaries for care leavers

The Income Tax (Care Leaver’s Apprenticeship Bursary Payment) Regulations, SI 2020/922 set out the conditions that must be met for a care leaver’s apprenticeship bursary payment to be eligible for an income tax exemption under ITEPA 2003 s 254A. The exemption applies in relation to payments made on or after 29 September 2020, although the explanatory notes to the Regulations say that HMRC ‘will exercise its collection and management discretion and will refrain from collecting any income tax due’ on payments that have already been made since the scheme came into effect in August 2018.

HMRC’s new guidance on the tax treatment of apprenticeship bursaries for care leavers provides a concise overview of the scheme for employers, noting that employers do not have to pay any tax, NIC or have any reporting requirements on the bursary payment to apprentices who are care leavers or in the care of a local authority. The £1,000 bursary payment is made by the Education and Skills Funding Agency (ESFA) to apprentices who are aged between 16 and 24 and are starting an English apprenticeship. The guidance also confirms that the exemption is intended to apply for apprenticeships beginning on or after 1 August 2018.

The Social Security (Contributions) (Amendment No. 4) Regulations, SI 2020/923 introduce the necessary disregard from earnings for Class 1 NIC purposes, for the apprenticeship bursary payments.