Share Incentive Plan (SIP) ― qualifying conditions for companies

Produced by Tolley in association with

Employment Tax

Guidance

The qualifying conditions for SIPs may be considered strict from a corporate perspective. It is not that few companies can meet the qualifying conditions, but rather that the plan itself must be designed and implemented in very specific ways to qualify for the tax advantages available for a SIP.

There are no EMI-style restrictions on the gross assets of the company or group, nor on the number of employees that are able to work for them. Similarly, there are no restrictions on the company's industry or type of trade. As with all other HMRC tax-advantaged share schemes, unlisted subsidiary companies cannot operate a SIP.

HMRC guidance on general requirements which must be met is at ETASSUM20000 onwards.

Plan purpose

The SIP’s purpose must be to provide an ongoing stake in the employing company (or their employer’s parent company) by way of shares. It cannot offer cash instead or have any other purpose outside those set out in ITEPA 2003 Schedule 2.

All-employee

The company

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

Personal Tax

VAT on property disposals

VAT on property disposalsThis guidance note provides an overview of the VAT treatment of selling property that is located in the UK. The UK includes Great Britain, Northern Ireland and the territorial sea of the UK. The sale of any land or building located outside the UK is outside the scope of UK

14 Jul 2020 13:57 | Produced by Tolley Read more

Owner-Managed Businesses

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more

Employment Tax

Loans written off

Loans written offCompanies sometimes provide directors, employees or shareholders with low interest or interest-free loans either as part of the reward package or on special occasions to help the individual meet significant expenditure. The employment income implications of these loans are discussed

14 Jul 2020 12:11 | Produced by Tolley Read more

��Ӱ��