06 January 2022 
Julia Ascott, Employment Taxes Specialist
In Johnson [2022] TC 08346, the First Tier Tribunal (FTT) found that amounts received during attendance on a university training course were earnings rather than scholarship income; PAYE and NIC were therefore due.
Ms Johnson had worked as a Band E geriatric nurse at Whipps Cross Hospital. The hospital ran an initiative incentivising staff to specialise and she successfully applied to South Bank University on a midwifery course. The 18 month course was divided between university and hospital, with the majority of time spent on Whipps Cross Maternity Unit. After the successful completion, Ms Johnson became a Band F midwife at Whipps Cross.
Ms Johnson had applied for a refund of PAYE/NIC deducted by her employer whilst she was on attendance on NHS Widening Access Training (WAT) schemes on the basis it was scholarship income, which was refused.
The terms of the incentive scheme were ‘when you enter into training, you would not be paid less than you were paid as a registered nurse’. Ms Johnson’s HR records show that she was employed as a band 6 nurse from 1997 to 2003 and her P60s show that PAYE/NIC were deducted from her gross earnings of employment.
The income was not clearly identifiable as scholarship income but instead derived from an ongoing employment and the FTT found that payments were therefore earnings for PAYE. In addition, they found that NIC could not be disregarded as Ms Johnson was an employed earner and the NIC disregard for scholarship income was not applicable until 1 September 2005, after her training had ended.
