D1.333 Share incentive plans
A share incentive plan ('SIP') provides for shares to be awarded to or acquired by employees of a company by reason of their employment. The shares are held for a specified minimum period by trustees on behalf of the employees. A plan must be self-certified by the employer as a 'Schedule 2 SIP' which meets the necessary conditions, described in E4.528–E4.5421.
The costs described below can be deducted as trading expenses2 (or, in the case of an investment company or insurance company, as expenses of management3).
Cost of setting up the plan
A deduction is allowed for expenditure by a company on setting up a SIP which is self-certified as a 'Schedule 2 SIP'4. The deduction is given for the period of account in which the expenditure is incurred if the relevant date falls within nine months after the end of that period; otherwise it is given for the period of account in which the relevant date falls5. The relevant date is the date the self-certification declaration is made (or the first award date if earlier)6.
Expenditure deducted under these rules cannot also be deducted under any other provision7.
The rules do not deny a deduction for contributions to the trustees' expenses of operating the plan. Those expenses do not include the actual cost of acquiring shares, but do include interest on money borrowed to acquire shares and incidental costs of acquisition (fees, commission, stamp duty etc)8.
Deduction for providing shares
A SIP may provide for shares to