Share incentive plans ― an overview

Produced by Tolley in association with

Employment Tax

Guidance

Introduction

Share incentive plans (SIPs) were originally known as ‘All Employee Share Ownership Plans’ and were first introduced over 20 years ago. They are one of four tax-advantaged employee share schemes currently available in the UK. Under a SIP, employees can buy shares in their employing company from their gross salary whilst the employer can also provide them with matching shares at no extra cost to the employee. The shares are held in a separate SIP trust whilst they reside in the SIP plan. The legislation governing SIPs is found in ITEPA 2003 Schedule 2, and HMRC often refer to this type of plan as a Schedule 2 SIP.

When all relevant conditions are satisfied, no liabilities to income tax or national insurance contributions (NIC) arise on shares being awarded to employees or withdrawn from the SIP. Qualifying Schedule 2 SIPs must be open to all eligible employees. See Simon’s Taxes E4.528.

Employers must self-certify that all the SIP legislation is met by the plan following the end of the tax

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Helen Wood

Founder, HLN WD TX , Employment Tax

Helen Wood is the founder of HLN WD TX, a share schemes and employee incentives advisory business.She qualified as a CA with ICAS in 2009 and has worked as a specialist reward and incentives advisor for 17 years, spending 13 of those at KPMG followed by 3 ½ years as an Associate Director at RSM. Helen has worked with businesses ranging from start-ups to fully listed companies, spanning owner-managed businesses, private equity portfolio companies, and AIM listed businesses.She advises on a wide range of employee share schemes and employment related securities matters including the design and implementation of effective management and employee incentives; tax valuation of employment related securities, buy and sell side transaction support, HMRC compliance, tax due diligence and employee ownership trust transactions.

Popular Articles

Corporation Tax

Associated companies ― from 1 April 2023

Associated companies ― from 1 April 2023Implications of associated companiesFrom 1 April 2023, the rate of corporation tax that a company is subject to depends on the level of its augmented profits. The rate of tax is based on a comparison of the company’s augmented profits against the corporation

22 Mar 2021 10:21 | Produced by Tolley Read more

Owner-Managed Businesses

Bad debts

Bad debtsBad debts usually arise where goods or services have been provided to a customer, for which payment has not been received within a reasonable or specified time period, or for which the customer is unable to pay. It is necessary to determine the quantum of relief that can be claimed for bad

14 Jul 2020 15:34 | Produced by Tolley Read more

Corporation Tax

Withholding tax

Withholding taxIntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeUK withholding tax may be reduced under the provisions of a double tax treaty (DTT). Prior to 1 June 2021, payments of interest and royalties made to EU resident associated companies were

14 Jul 2020 14:01 | Produced by Tolley Read more

��Ƶ