Dear Vice-Chancellor or Principal
1. This letter provides guidance to institutions on how to verify the income of those part-time students that may be eligible for an award from the National Scholarship Programme. No action is required in response.
2. This letter should be read in conjunction with the guidance we published in April 2011 'National Scholarship Programme 2012-13: guidance for institutions' (HEFCE 2011/10) on the operation, management, funding, monitoring and review of the National Scholarship Programme for the academic year 2012-13.
3. This guidance is intended to help institutions develop their systems to effectively verify the income of those part-time students that may be potential beneficiaries of the National Scholarship Programme. It will be the responsibility of institutions to ensure that their systems for undertaking such income verification are sufficiently robust.
4. The guidance we issued in April 2011 and referenced in paragraph 2 above advised institutions that the Government had set broad-based national eligibility criteria for the National Scholarship Programme, based on household income. It states that students are eligible to apply for and be awarded a scholarship if their declared household residual income is £25,000 or less, whether they are full-time or part-time students.
5. The guidance also advised institutions that the Student Loans Company (SLC) would only provide income verification for those students that have applied to it for state maintenance support. For those applicants that are not entitled to state maintenance support for the 2012-13 academic year, such as part-time students, institutions will have to use their own methods of verifying household income to assess eligibility. We advised that we would work with the SLC, Universities UK and GuildHE to develop further guidance in relation to income verification.
6. The SLC recently issued a request to institutions to indicate whether they would be interested in the SLC undertaking a verification check for a limited number of students on a sample basis, through paid subscription. If there is sufficient interest from institutions in paying for such a service the SLC will seek to make it available for the 2012-13 student intake.
Assessing financial eligibility of part-time students
7. The following guidance has been provided by the SLC. Details about the assessment of household income for part-time students (Adobe PDF) can also be found via the SLC practitioner web-site.
8. The primary method used by the SLC to assess family income is the single means test. A single means test is undertaken on a student’s gross income and, where appropriate, their partner’s gross income from all sources in the previous financial year1. It also includes the gross income of any dependent children. However, gross income excludes child tax credits, working tax credits or any tax free higher education bursary received by the student or, where relevant, their partner.
9. In addition to the exclusions noted in paragraph 8, when calculating the gross income the following allowances can also be made:
- £2,000 allowance for the student’s partner (regardless of their circumstances or income)
- £2,000 allowance for an only or eldest dependent child
- £1,000 allowance for any subsequent dependent children
- any tax credits.
10. There are three categories of income that institutions can assess and verify. These are: no income; employed income; and self-employed income. Each is considered below.
11. Students in the 'no income' category will be those in receipt of income assessed benefits or whose spouse/partner is in receipt of income assessed benefits. The income assessed benefits are as follows:
- income support
- housing benefit
- local housing allowance
- council tax benefit
- income based job seekers allowance
- an allowance under the arrangement known as New Deal
- income related employment and support allowance (ESA).
12. Students will need to provide evidence that they are in receipt of these benefits and this evidence must be no more than four weeks older than the date of application for the award. Acceptable evidence that they are in receipt of benefits is either a letter signed or stamped by the council offices or job centre, or a completed ‘Confirmation of Benefit Entitlement’ (CB1) form which can be downloaded from the Directgov web-site and which would also need to be signed or stamped by the council office or job centre.
13. Evidence of employed income is verified using the following documents which the student may need to provide:
- month 12 payslip.
14. The P45 and P60 both state the gross income for the financial year, while the P60U is the equivalent of a P60 as issued by the job centre which shows the sum of the taxable benefits received in the stated tax year. The month 12 payslip (which would be received in March 2012 for the 2011-12 tax year) shows the taxable earnings for the year to date and will provide the full year gross figure.
15. Institutions should be aware that a lower than standard tax code often indicates that the student is in receipt of benefits in kind such as a company car or healthcare provision. The standard tax coded for the 2011-12 tax year is 747L. Receipt of benefits in kind would be indicated by a lower tax code, such as 606L for example. In addition, other tax codes such as BR, T, M1 and W1 can indicate further sources of income. If institutions encounter such codes therefore, further information should be requested from the student. If a student is in receipt of benefits in kind a P11D should be requested which lists any taxable benefits in kind received from an employer such as a company car or medical insurance. The P60 and P11D can then be considered together.
16. If the student declares income from savings and/or investments evidence is not required. The amount of income declared by the student is accepted. However, institutions will want to investigate further if the income from such savings and/or investments is the only income declared by either the student or their partner/spouse.
17. The income of students who are self-employed should be assessed using the student’s self-assessment tax return for the financial year 2011-12. However, if the tax return is not be available until January 2013, institutions should request an estimate of earnings supported by a declaration from an accountant. Income can then be assessed on a provisional basis and, once the tax return is available, can be checked against the actual figure in the tax return. In these circumstances, institutions should make the award of the NSP scholarship conditional on the tax return verifying the provisional estimate and should seek to deliver the award once income has been confirmed.
18. If the student declares income from savings and/or investments, institutions should take the same approach as outlined in paragraph 16 for employed students.
19. If the student declares any other income, institutions should exercise their own judgement as to whether additional evidence is required and if so, what type of evidence would be acceptable and proportionate to the income declared. Institutions should note that income from property should be included in the tax return.
20. If you have any queries regarding the income verification process as outlined in this letter or on the National Scholarship Programme more broadly, please contact Anju Kataria on 0117 931 7180, firstname.lastname@example.org.
Sir Alan Langlands
For students starting the 2012-13 academic year before 1 July 2013, the previous financial year covers the period 6 April 2011 to 5 April 2012.
For students starting the 2012-13 academic year after 1 July 2013, the previous financial year covers the period 6 April 2012 to 5 April 2013.