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

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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.

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