Hi everyone,

I am about to start a PhD in UK and, as many of you, I will earn a stipend from my university. The scholarship is issued by EPSRC. I am classifying as a full time UK/EU student under a full scholarship stipend. My PhD program allows the students to undertake projects/part time work in the industry for relatively extended periods, especially from the second here.
This option offers the opportunity of earning an additional income stream that could significantly improve the finance/living conditions of the student.

My main issue are the difficulties I am facing in understanding how, under a tax perspective, two possible sources of income are taxed in the UK. Let assume that the tax free phd stipend amounts to x £. Then we have also an industry salary (regardless the type of contract) of y £, assuming that the amount of y £ exceeds the non taxable barrier (I think is around 8k per annum here in the UK). How the taxation work in this case ? will my phd stipend of x £ remain tax free regardless how much I additionally earn from other sources, thus leaving only the non phd income stream of y £ subject to regular taxation? Or instead, will the taxation applied to the cumulative income x £ + y £.

I think that some of you may have dealt with this situation, either by undertaking industry work related to your research or by undertaking teaching/university works. I would appreciate a lot if some of you might help me on these questions that, in spite of a consistent effort, I have not been able to answer so far.

I believe your stipend is always tax free regardless of other earnings because it is not classed as income.

Hello,

Many thanks for your answer. Your opinion is really important as tax lawyers keep saying that my case is really uncommon, struggling to help. So basically this means that I should not get obsessed with the tax offices and in filling in forms of any sort: i keep receiving my net phd stipend and, if i will obtain a parallel job, an after tax salary (So i correctly pay taxes on this income) without worrying about how much I earn from this job as it will not affect the tax free status of the phd stipend.

Do you think we have the same situation (This strong separation) for the possible benefits that could come from each income stream? I give you a dummy example: a PhD student, i think (do not take it as absolute truth), has some discount on council tax and transport costs. Then let's assume that there is also an industry contract that allow the worker to consider some benefits like claiming the cost of business trips or part of the rent if a portion of the work is systematically done from home (say once a week). Do you think that all these benefits can co-exist or the government does not allow for combining all this (as if a regulation forbids to receive a deduction on council tax (due to phd role) and claim at the same time a portion of the rent as the flat is systematically used for a x days a week as office)?

Many thanks

Obviously I'm not an expert, this is just information I've gleaned from my previous work in financial services and from financial qualifications I've taken.

Your local council gives you free council tax on the basis of your student status - your university informs them of this automatically, although sometimes they hassle you for written proof, which you can get from the university as well.

It doesn't matter how rich you are or how much you earn, if you are a student you don't have to pay council tax.

Expenses also don't count as income so you don't need to declare those to anyone either.

You just let yourself be paid by whomever is going to pay you, and then HMRC will treat you as any other employed person. You don't need to mention your stipend to them as it is not classed as income so doesn't make any difference. If you get 'benefits in kind' from your employer, those need to be declared to HMRC as they are taxable. Expenses are not benefits in kind though. I'm not sure about claiming rent expenses - that may be a benefit in kind.

All I want to say is many many thanks for providing these clarifications. I will consider my PhD stipend as something "outside" the HMRC sphere, therefore, the only stream that will be subject to taxes will be the one made of the income and the eventual bonus, benefits etc from any industrial collaboration.

Stipend counted as partner income for CT purposes.

Slight complication on that Council Tax advice. It is true that as a student you are not counted at all for Council Tax, however when my wife applied for Council Tax benefit (she is unemployed and would normally get full CT benefit) the council insisted on counting all of my Stipend income as family income, i.e. her income and therefore she was required to pay 75% of council tax bill. (25% reduction for being the only eligible adult in the property).
We have appealed against this (unsuccessfully so far). Councils seem to apply the rules in different ways. The rules say the student is 'invisible' as far as CT calculations go, but even if the stipend was to be counted it is not all income as much of it goes on research expenses yet the council was not interested in this either.