The Benefits of Learning

EMA

Have you heard of the Education Maintenance Allowance (EMA)? Do you know what it is and who is eligible for it? Read on to see whether it might apply to you or someone you know.

What is it?

The EMA is paid to young people aged 16 or over to encourage them to stay on at school or college. If certain conditions are satisfied, teenage children in the family may be eligible for EMA. It is available to those taking an academic or vocational course involving at least 12 hours of guided learning each week.

How much is it?

The EMA is a weekly payment of £10, £20 or £30 depending on household income. It is paid for every week of the course so long as the individual turns up to classes. Bonuses (worth several hundred pounds) may also be payable depending on the progress made on the course.

EMA does not affect any other benefits payable within a family. It’s paid on top of these and any earnings from the student’s part time job.

See if you fit the bill

• Your household’s income is under £30,000 a year
• You are between the ages of 16 and 19
• You’re doing at least 12 hours of guided learning per week.

What next?

You can apply for EMA at any time. See www.dfes.gov.uk/financialhelp/ema or phone 080 810 16 2 19.

Scholarships

Perhaps you have left school and started a full-time job? What if your employer offered to pay you to go to college? Far fetched…..perhaps but some employers do provide some sort of ‘scholarship’ to help with the costs of a college or university course. In simple terms an employer could pay an employee up to £15,000 free of tax (and national insurance) in the current academic year so long as certain conditions are satisfied. The exemption is not new but the limit is. Previously the maximum was £7,000. The government now says it will review the limit on an annual basis.

The exemption applies so long as the employee is enrolled at a recognised ‘educational establishment’ for at least one academic year and attends full-time for at least 20 weeks of the year. Perhaps not surprisingly the employer’s own internal training school or college does not count.

Any payments made are intended to cover lodging, subsistence and travel costs but not tuition fees.

Both employer and employee should watch out for the following if such payments are being considered.

1. If the payments exceed £15,000 in an academic year all or part of the exemption may be lost. It may be worth considering an interest-free loan from employer to employee instead if top-up funding is needed. Keep this below £5,000 and generally there will be no tax consequences so long as the loan is ultimately repaid.
2. Take care with courses requiring students to take a year out to gain practical work experience. Wages paid during this period are taxable (and subject to national insurance) in the normal way. Similarly for payments made for work done during the holidays or at weekends.
3. Generally speaking the exemption is not available if the scholarship is provided to a child of an employee unless it can be shown that the scholarship would have occurred regardless of the employment relationship. This restriction is not surprising but makes it practically impossible to use the exemption in a family company.