Forum Home → Discussion → Universal credit administration → Thread
Advice welcome - Student Income or Not?
Dear All
Any thoughts on this would be appreciated.
Client is Ukrainian and a researcher. She applied and was awarded UC when she arrived in UK. At the same time she applied for research funding from the British Academy and was awarded a fellowship over 2 years from 31 Jan 23 to 1st Feb 2025 which equated to £3,083 per month.
The client tells me that the amount is not taxable. Do you think that this amount is disregarded because the BA is a charity and charity support is disregarded as “other income”? - the British Academy is a Registered Charity, number 233176.
She declared this to UC in Jan 23 when it was awarded. UC assessed it and decided that this was disregarded income and paid her UC (SA, CE and Housing element amounting to £1,938).
She moved house a couple of months ago and therefore moved JCP in Nov. This prompted them to reassess her claim when they decided that this income should have been taken into account and she got a letter on 14th Dec saying that she was liable for an OP of £7,574.64. She requested an MR the same day and they issued an MR decision on 19th Dec. She has already requested an appeal. Her UC claim has now been stopped.
I am wondering if it iw ill be student income as per reg 66(1)(e) and then assessed under reg 70 which is what UC appear to have done, as they have disregarded £110.00 - see from the notice of MR
“You provided a letter detailing your fellowship award and this confirms you will receive £74,000
over 2 years. This equates to £3,083.33 per month.
You have informed an agent on 2 separate occasions that this payment is to help with your
research costs and living expenses although no breakdown of the split in this payment has been
provided.
You have stated that your fellowship payments of £3083.33 per month after covering your rent
and council tax payments only leaves you with around £700.00 to balance between household
expenses and your research expenses, this is accepted as being accurate, however up until 14th
December 2023 when your other income was first reported within your claim these expense
were covered by UC and so this income was received fully by yourself.
You have stated in your reconsideration request that you had first reported your fellowship
payment in January 2023 but that no action had been taken at this time, this is accepted as
being accurate, however, it was noted on your claim that a decision on your employment status
would need to be established prior to a decision being made on the treatment of your payments.
It remained unclear as to if your status was employed, S/E, a student, or a S/E researcher and
this was sent for clarification on 29th November 2023 following a S/E interview at the jobcentre
your work coach. They asked a DM to look at your fellowship payments after you reported
spending your monthly fellowship payment for you research on yourself.
The DM determination was that as you received a fellowship award payment of £3083.33 per
month which was applicable over a 24 months period from 31st January 2023, you were not
considered as employed, self-employed or a student and had confirmed this award is to assist
with your research costs and living expenses a £110 disregard should be applied to this
payment as although you are not a student, this award is made to assist with your academic
research.
Therefore, the following calculation of other income was completed and applied to your award.
£3083.33 - £110 = £2,973.33
This amount is treated as other income from the AP 16th January 2023 to 15th January 2026
Your UC for the notified period had already been calculated and paid to you when UC applied
your fellowship income to your award calculations and the subsequent overpayment was
informed to you.
You have provided no evidence or explanation to show why this overpayment should
not be recovered, and it is notable to recognise that as is recorded in the above-mentioned
criteria; any payment of UC made in excess of entitlement is a recoverable overpayment,
regardless of how the overpayment was caused. This is because there is a duty to protect public
funds. “
I also came across this spotlight from another post that seems to suggest UC are correct.
As noted any ides would be greatly appreciated.
I first of all wondered how often the payments were actually made to her in case there’s any consideration that this is capital, in which case might at least some of it (paid for research costs) be disregarded as a business asset if she is in fact self-employed? (However, if the money is not paid in one go, & paid regularly, that does suggest it is income).
If it is income, she’s not undertaking a course - so can reg 68 apply?
I think it might be worth arguing that as she is not undertaking a course, this isn’t student income.
There is then the question of the self-employment, as mentioned in the MRN. I don’t know if the DWP have properly considered this. Is this payment the remuneration/profits of her trade/profession/vocation, or of any other paid work (reg 52)?
Is the funding conditional upon her doing certain research? If so I wonder if it’s possible that it is remuneration/profits paid in advance. That seems worth exploring. We know that at least some of it is for research costs & to the extent it is spent on that it won’t all be profit. Does she have to return the money if she doesn’t do the research?
The downside of that of course is that she wouldn’t get the £110 disregard, but it may be that her research costs are higher than that. If she is actually paid £3083 a month, she wouldn’t have to worry about the MIF even if it was decided she was in gainful self-employment (well not for the period covered by the funding anyway). It would get more complicated though if the money is not in fact paid each month but less often (when her profits would be very irregular & for some assessment periods her income could be too high to get UC, whilst in others the MIF could apply). If she’s not in gainful self-employment then this isn’t a concern unless that in turn means she has to look for other work (not sure whether she’s a carer or has a child when you say CE).
The ideal argument (avoiding any overpayment) would be if it is neither student income (and I really don’t think it is) nor profits/remuneration for her profession/vocation or for any other paid work, then it is to be disregarded. But that isn’t simply because it is paid by a charity - as there is no specific provision disregarded charitable income. Instead, I think you have to show it falls neither under reg 66(1)(e) (because reg 68 can’t apply) nor under reg 52.
And that is all assuming it isn’t capital. In some similar cases where people got grants for creative pursuits I’ve tried arguing it is capital & at least partly a business asset, but that was because they were getting paid the whole thing in one go. It does seem here that being a researcher is a profession for this person & I think self-employment/paid work under reg 52 can apply even if someone is not in ‘gainful self-employment’ under reg 64.
Finally if none of this works there’s also the possibility of disputing op recovery; it sounds as if she told them everything & was up front about the facts, & whilst she didn’t check up on her entitlement she may nevertheless have had a legitimate expectation that she was being paid correctly, given this continued for around 8 or 9 months (https://askcpag.org.uk/content/209502/overpayments-legitimate-expectation-human-rights).
It looks very much that the claimant is the recipient of a Researchers at Risk Fellowship from the British Academy (BA), especially as the normal maximum amount of the stipend is £37,000 p.a. for two years. This is a scheme, primarily a response to the invasion of Ukraine, to enable researchers at postdoctoral level to continue their research, enhance their skills and build long-lasting collaborative links with their UK counterparts. The application has to be made by a UK higher education institution that is willing to host and support the recipient and eligible expenditure that can be costed into the application includes contributions towards living expenses and towards research costs. Payments are made through the Council for At-Risk Academics (CARA)
There is quite a bit of information on these Fellowships on the British Academy website, including this useful paragraph in the Guidance Notes:
“18. The fellowship award holders will receive their award in monthly stipends from Cara as a restricted donation which is not subject to income tax. The award holders will not be employees of the host institution and should instead be registered, depending on the host institution’s process, as Visiting Researcher, Research Fellow or a similar title.”
I think that that information makes it clear that the stipend is in the nature of income, not capital. I think it is also clear that it cannot be treated as student income within reg.66(1)(e) and 68 of the UC Regs. Although the stipend would fall within the meaning of “grant” in reg.68(7), it is plain that a grant cannot be treated a student income unless the recipient is undertaking a course of education, study or training (reg.68(1)). Anyone carrying out some structured and disciplined piece of research might in the very broadest sense be said to be undertaking a course of (self) education, but, as reg.13 makes clear, in reg.68(1) the meaning must be restricted to courses offered by institutions that require some form of registration as a student and a qualification at the end. The claimant here is not undertaking such a course.
The DM was therefore correct to conclude that the claimant was not a student, but the reasons become incoherent when the decision appears to apply the rule that would operate if the stipend/grant did count as student income. Nor is it all clear what form of income it was considered that the stipend constituted when being employed or self-employed (but not self-employed as a researcher??) had also been ruled out, as, true to form, the DM makes no reference to any precise provision or category in the Regs, merely referring to “other income”. But the proper treatment remains rather mysterious.
The BA’s confident statement that the stipend is not taxable suggests that HMRC does not consider that it goes towards profits of a trade, profession or vocation. But that appears to be on the basis only of a general concession (although it may be that further information could be obtained from the BA). HMRC’s Business Income Manual (BIM 65155) says that as a result of discussions with the BA HMRC has agreed that in general BA grants and awards are not taxable. But the next sentence says that if the payment is received in the course of a profession or vocation advice should be sought from a specialist unit. Thus the possibility that a person in receipt of a BA grant or award might, although not trading in any sense, be regarded as pursuing a profession or vocation within the charging provisions has been left open by HMRC, although evidently the claimant here has not been regarded as subject to income tax.
The UC authorities would not here be bound by the view taken by HMRC, but the reference in regs 52(a)(ii) and 57 is to remuneration or profits derived from a trade, profession or vocation and the claimant here could obviously be said to have demonstrated her commitment to her research as a profession or vocation by taking the steps in what would no doubt have been very difficult circumstances to qualify for the Fellowship. The difficulty then, as has already been noted, is how the circumstances would fit into the calculation provisions in regs 57 and 58, which are primarily geared to someone trading as self-employed in the conventional way. If those provisions were to be applied, the focus ought to be on what is received in each AP and what has been spent in that AP on allowable expenses, with the issue of what sort of expenditure could be regarded as wholly and exclusively incurred for the purposes of the profession or vocation, as opposed to the sort of automatic spreading and deduction carried out by the DM. Maybe it could be argued on appeal that, if the DM’s attribution of income was wrong, it is for the DWP to set out what the correct attribution is and why.
A further possibility that might need exploration is reg.66(1)(m) (income taxable as miscellaneous income under Part 5 of ITTOIA). That Part includes s.687 making taxable any income not chargeable to income tax under any other provision of ITTOIA or any other Act, the section used to cover casual earnings etc. However, without going into the tax case law (on which I am not competent to comment), the application of reg.66(1)(m) appears to depend directly on the treatment by HMRC under ITTOIA. Here, it is evident that HMRC has not regarded the stipend as subject to income tax under s.687. If the DWP wished to argue on appeal that reg.66(1)(m) applied, it would be necessary for it to come forward with evidence as to the relevant income tax legislation , case law and outcomes to seek to justify that conclusion.
Many thanks to you both.
Will certainly run an appeal and see where we get to.
Cheers and HNY