Can someone please tell me if PhD income (studentship or sponsor) is taxed? I've been told it is'nt.

That is correct (for research council funding at least).

My studentship used to pay for all fees, and give me a tax free stipend of just over a £1000 a month. We also got extra funding for conferences. You don't pay council tax and are eligible for NUS student discounts and railcards in the UK.

Its not a huge amount, compared to my friends who were working in professional jobs, but a darn sight better than paying for it yourself.