Individuals aged between 16 and 24 who are in or who have left care and started an apprenticeship in England on or after the 1st of August 2023, and who receive the £3,000 bursary introduced by the Education and Skills Funding Agency (ESFA) will receive statutory Income Tax and National Insurance contributions (NICs) exemptions under qualifying conditions to reflect the £3,000 bursary paid.
From 1 August 2023, the ESFA offers a £3,000 bursary to care leavers aged 16 to 24 who undertake an apprenticeship. Individuals are generally liable to pay Income Tax, and individuals and employers are both liable to pay Class 1 NICs, on payments that derive from an employment. This includes individuals who are employed as apprentices, and so this exemption ensures those receiving this bursary receive the full benefit of the bursary.
The Income Tax exemption will ensure that the tax treatment of a bursary to care leavers who undertake an apprenticeship is the same as the tax treatment of a bursary to care leavers who enter higher education. The payments will also not be subject to NICs. The NICs treatment of these payments will automatically follow the tax exemption.
