The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Share Incentive Plans (SIPs), originally known as ‘All Employee Share Ownership Plans’, were introduced at the same time as EMI. Since their introduction, the underlying rules and conditions have remained broadly the same, although in recent years various recommendations made by the Office of Tax Simplification (OTS) have led to the removal of some unnecessary anomalies between SIPs and other tax-advantaged share schemes. Also, an SIP was originally one of the three types of tax-advantaged share scheme that required HMRC approval (the others being CSOPs and SAYE option schemes). From 2014/15 onwards the requirement for HMRC approval has been replaced with a system of self-certification. Existing approved schemes had to re-register with HMRC and self-certify to retain the tax advantages of the SIP uninterrupted.
Due to the need to use a separate trust, the relative complexity of the arrangements and administration, as well as the requirement broadly to offer similar share rights to all employees, SIPs have almost exclusively been utilised by large, publicly quoted companies.
The SIP legislation is contained in ITEPA 2003, ss 488–515 and Sch 2. Further provisions are included in ITTOIA 2005, ss 382, 384–385, 392–396, 402–408 and 770.
HMRC has a section of its Employee Tax Advantaged Share Schemes User Manual dedicated to the subject which can be found at ETASSUM20000 onwards.
The trust must be constituted under UK law and all trustees must be resident in the UK. In addition, there is a legislative requirement that the trust instrument does not contain any terms that are neither essential nor reasonably incidental to compliance with legislation.
As a result, a separate trust is usually needed to operate these plans. This is a drawback, since many companies may have existing employee benefit or employee share trusts they could easily utilise for this purpose but are not permitted to.
Before introducing an SIP scheme it was, up to and including 2013/14, necessary to get HMRC approval to the terms
**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
Legislative definition of plant and machineryThe general rule allowing capital allowances on plant and machinery is given at CAA 2001, s 11. There is no statutory definition of the term ‘plant and machinery’ but there is confirmation in the legislation on what constitutes a building or a structure
IntroductionUK 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 also exempt from
This guidance note explains how trustees of bare trusts are treated for income tax and capital gains purposes. Although a bare trust is, in equity, a type of trust, for both income tax and capital gains tax purposes its existence is transparent. This means that no tax liability falls on the trustees
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