The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The share incentive plan (SIP) is a tax-advantaged employee incentive plan, which provides employees with the opportunity to obtain a continuing stake in the employing company through the acquisition of shares (not share options). Provided qualifying conditions are met, the SIP attracts income tax and national insurance contribution (NIC) advantages for participants.
The plan must be open to all UK resident employees, although a qualifying period of up to 18 months can be imposed. The terms must be the same for every employee who wishes to participate, and no preferential treatment can be given for directors or senior employees.
The SIP must be operated via a UK resident trust. The SIP trust holds shares on behalf of employees.
A number of changes were made to the SIP rules by FA 2013 and FA 2014 to simplify the administration of the scheme and harmonise some of the rules with that of other tax-advantaged schemes. One of these changes means that from 6 April 2014 a qualifying SIP is known as a ‘Schedule 2 SIP’.
All UK resident eligible employees must be able to participate in the plan, and must be invited to do so.
An employee is regarded as an ‘eligible’ employee if:
they are an employee of the company or a constituent company, and
they do not participate in any other Schedule 2 SIP established by the company or a connected company simultaneously
New employees may be ineligible to participate, as it is possible for plan rules to exclude employees who have not been employed by the company for the whole of a fixed ‘qualifying’ period that can be set at anything up to 18 months.
The material interest condition was repealed with effect from 17 July 2013.
Before that date employees or directors could not take part in the scheme if they had a material interest (over 25% of the ordinary share capital or assets at winding up) in a close company which was either the issuing company or an owner of
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
A ‘pilot trust’ is one that holds a nominal amount of property (typically a small sum of cash) and does not become active until further funds are added later. The later addition is sometimes made on the client’s death by a gift in his Will. The use of pilot trusts in conjunction with Wills became a
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s
Interest paid on qualifying loans is deducted from the taxpayer’s total income (ie a Step 2 deduction from total income). See the Proforma income tax calculation guidance note.Interest on qualifying loans is usually paid gross by the individual borrower; tax is not withheld at source. This includes
What is a quoted company?Reference to a quoted company is usually to a company where the shares in the company are listed on the London Stock Exchange, any other international stock exchange, or on AIM or ICAP Securities and Derivatives Exchange (formerly the PLUS market and now known as ISDX) in
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.