Are Student Grants, Bursaries and Scholarships Taxable in the UK? 2026 Guide

Students often receive income from multiple sources -- maintenance grants, university bursaries, scholarships, NHS funding and research stipends -- and are understandably confused about which of these are taxable. The short answer is that most educational funding is not taxable income. But the rules are not uniform, and the exceptions matter. This guide explains the UK Income Tax treatment of each type of student funding in 2026.

The Core Exemption: Education and Scholarship Income

HMRC's treatment of student funding flows from a general principle embedded in the Income Tax (Earnings and Pensions) Act 2003 (ITEPA). Section 776 provides that a scholarship held at a university, college or other educational establishment is exempt from Income Tax.

This exemption is deliberately broad. It covers:

• Maintenance grants
• Tuition fee grants
• Bursaries from the university itself
• Scholarships for academic merit
• Awards from charitable bodies for educational purposes

The key test is whether the payment is made to support a person in their education, rather than as payment for work performed.

Student Finance Grants and Loans

Maintenance Grants

Maintenance grants from Student Finance England (SFE) were abolished for new English students starting in 2016/17. However, devolved equivalents still exist:

• Wales: Welsh Government Learning Grant (means-tested)
• Scotland: SAAS bursaries and Young Students' Bursary
• Northern Ireland: Maintenance grants remain available

All maintenance grants from the devolved student finance bodies are not taxable. They are explicitly exempt under the scholarship provisions.

Maintenance Loans

Student maintenance loans (the loan component repaid through the Student Loan system) are also not taxable. Loans are not income for tax purposes at the point of receipt. Repayments are made from employment income above the threshold, and the repayments themselves are collected through PAYE or Self Assessment -- but the original loan receipt is never a taxable event.

Tuition Fee Loans

Fee loans paid directly to universities are not income of the student at all. They are a liability. No tax implications arise.

University Scholarships and Bursaries

Scholarships for Academic Merit

Scholarships awarded by universities based on academic performance are not taxable. Whether the scholarship covers fees, maintenance or both, the exemption applies provided:

• The award is made by an educational institution or a charity
• The student receives it to support their studies
• The student is not providing services to the awarding body in return

Most UK universities are registered charities and therefore their scholarships fall clearly within the exemption.

Discretionary Bursaries and Hardship Funds

Universities maintain Access to Learning Funds, hardship funds and discretionary bursaries for students facing financial difficulty. These are also not taxable income. They are grants made for welfare and educational purposes, not remuneration.

Sports Scholarships at Universities

Sports scholarships are slightly more nuanced. If a university awards a scholarship to a student athlete purely for their athletic talent, and the student is genuinely primarily a student rather than a professional athlete employed by the institution, the scholarship is generally not taxable.

If, however, the arrangement involves the student providing coaching services, appearing at commercial events or otherwise working for the university's athletics programme for pay, any payment for those services would be taxable employment income -- distinct from the scholarship.

NHS Bursaries

The NHS Bursary Scheme provides funding to eligible students studying nursing, midwifery and allied health professions in England. The bursary includes:

• A maintenance grant (non-repayable)
• Reimbursement of tuition fees
• Additional allowances for dependants, disability and practice placements

NHS bursaries are not taxable. They are grants from the NHS Business Services Authority (NHSBSA) and are treated as exempt educational funding. Students receiving NHS bursaries also remain eligible for a reduced-rate student maintenance loan from SFE.

Similar non-taxable bursary schemes operate in Wales and Scotland for healthcare students.

Social Work Bursaries

The NHS/government also funds social work bursaries through Health Education England (now NHS England) and the Social Work England training bursary. These cover students in approved social work degree programmes and are likewise not taxable income.

PhD Stipends and Research Grants

UKRI and Research Council Stipends

PhD stipends funded by UK Research and Innovation (UKRI) bodies -- including AHRC, BBSRC, EPSRC, ESRC, MRC, NERC and STFC -- are not taxable income in most circumstances. The payments are made to support the student's research training, and they fall within the scholarship exemption.

The 2026/27 UKRI minimum stipend is £20,780 per year for full-time students. Despite being above the Personal Allowance of £12,570, this income is exempt from Income Tax and does not attract NI contributions.

CASE Awards and Industrial PhD Studentships

Where a company co-funds a PhD studentship (through a CASE -- Collaborative Awards in Science and Engineering -- or similar industrial partnership), the tax position depends on the contractual arrangements:

• If the company merely contributes to the academic stipend with no obligations on the student to perform work for the company, the stipend remains exempt
• If the student is also employed by the company, required to work at the company's premises or provide deliverables, the company payment may be taxable employment income

HMRC has historically applied this distinction robustly. Students on industrial PhD schemes should check whether the company component of their funding is paid as a scholarship or as employment income (with a contract, payslip and employer NI).

Wellcome Trust, Leverhulme and Charitable Stipends

Stipends paid by major research charities such as the Wellcome Trust, British Academy, Leverhulme Trust and similar bodies are charitable grants and are not taxable income. The charitable body exemption applies.

Scholarships From Commercial Sponsors

Where a commercial company (not a charity or academic institution) pays a scholarship directly to a student, the tax treatment is less certain. HMRC looks at whether:

• The student is obliged to work for or with the company (now or after graduation)
• The scholarship is conditional on performance of services
• The amount is commensurate with a market salary for similar work

If the scholarship has conditions attached that amount to services rendered, HMRC may treat part or all of the payment as employment income, subject to PAYE and NI. Students in sponsored degree programmes (for example, degree apprenticeships where a company pays fees and a salary) typically receive the salary element as taxable employment income.

Means-Tested Grants: A Note on Disclosure

Even though means-tested grants are not taxable, they can affect eligibility for other means-tested support. For example:

• Universal Credit claimants must report all income and certain grants to the DWP
• Some local authority discretionary housing payments take account of educational grants
• Disabled Students' Allowances (DSAs) are assessed on their own terms and are not taxable

If you are receiving both educational grants and means-tested welfare benefits, report all sources of income to the relevant authority -- even if the grants are not taxable for HMRC purposes.

Employment Income Alongside Study

This is the most important distinction. Student status provides no exemption from Income Tax or National Insurance on employment income. A student working part-time in a bar, a shop or as a freelancer pays exactly the same Income Tax and NI as any other worker:

• Personal Allowance: £12,570
• Basic Rate Income Tax: 20% above £12,570
• Employee NI: 8% on earnings between £12,570 and £50,270

If a student earns £15,000 in part-time employment during the tax year, approximately £488 in Income Tax is due (20% x £2,430 above the Personal Allowance). This is true even if the student also receives a non-taxable £20,780 PhD stipend in the same year -- the employment income is assessed entirely separately.

Self Assessment and Student Funding

Students who receive only exempt grants, bursaries and loans have no obligation to file a Self Assessment tax return. However, a return is required if:

• Employment income exceeds £150,000 (unusual for students, but possible for postdoc transitions)
• Self-employment income exceeds £1,000 (the trading allowance)
• Any income not taxed at source is received
• You received a P800 from HMRC indicating tax is owed

If you file a return for any reason, you should include exempt grant income in the appropriate section and mark it as exempt -- do not simply omit it.

The Bottom Line

The vast majority of student funding in the UK -- maintenance grants, maintenance loans, university bursaries, NHS bursaries, UKRI PhD stipends, charitable scholarships -- is exempt from Income Tax. The exemption flows from the scholarship provisions of ITEPA 2003. The key exception is where a commercial company pays funding in return for services, or where a student is also employed and receives a salary. Employment income earned alongside studying is always taxable on the same basis as any other worker. If you are unsure about a specific funding arrangement, particularly a commercial sponsorship or industrial PhD scheme, check with HMRC or a tax adviser before assuming the income is exempt.