SIPs—capital gains tax and corporation tax
Produced in partnership with Jonathan Fletcher Rogers
SIPs—capital gains tax and corporation tax

The following Share Incentives guidance note Produced in partnership with Jonathan Fletcher Rogers provides comprehensive and up to date legal information covering:

  • SIPs—capital gains tax and corporation tax
  • The CGT treatment of SIP shares for the SIP trustees
  • CGT treatment for participants in a SIP
  • Transfers into an individual savings account or pension scheme
  • CGT relief for disposals into a SIP
  • Corporation tax relief in relation to SIPs

The SIP is the only tax advantaged share plan under which participants can potentially enjoy unlimited gains in the value of their shares free of income tax, National Insurance contributions (NICs) and capital gains tax (CGT).

Under all of the other tax advantaged plans (enterprise management incentives (EMI) schemes, save as you earn (SAYE) schemes and company share option plans (CSOPs)), CGT is potentially due on the increase in the value of shares since the options were granted. However, if a participant in a SIP retains his shares in the SIP until they are disposed of, he will not pay any CGT on such disposal.

The tax consequences explained in this Practice Note apply to individuals who are at all times resident in the UK for CGT purposes.

For details of the income tax and NICs implications for participants in a SIP, see Practice Note: Share incentive plans—income tax and NICs treatment of awards.

For more information on SIPs generally, see Practice Note: What is a share incentive plan?

The CGT treatment of SIP shares for the SIP trustees

For CGT purposes, SIP participants are treated as being absolutely entitled to any SIP shares held on their behalf by the SIP trustees.

The shares are treated for CGT purposes in the same way as if they were held under a nominee arrangement for the participant.

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