Share Incentive Plan (SIP) ― qualifying conditions for companies

Produced by Tolley in association with

Employment Tax

Guidance

The qualifying conditions for SIPs may be considered strict from a corporate perspective. It is not that few companies can meet the qualifying conditions, but rather that the plan itself must be designed and implemented in very specific ways to qualify for the tax advantages available for a SIP.

There are no EMI-style restrictions on the gross assets of the company or group, nor on the number of employees that are able to work for them. Similarly, there are no restrictions on the company's industry or type of trade. As with all other HMRC tax-advantaged share schemes, unlisted subsidiary companies cannot operate a SIP.

HMRC guidance on general requirements which must be met is at ETASSUM20000 onwards.

Plan purpose

The SIP’s purpose must be to provide an ongoing stake in the employing company (or their employer’s parent company) by way of shares. It cannot offer cash instead or have any other purpose outside those set out in ITEPA 2003 Schedule 2.

All-employee

The company

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Helen Wood

, Employment Tax

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