Share Incentive Plan (SIP) ― qualifying conditions for employees

Produced by Tolley in association with

Employment Tax

Guidance

As the share incentive plan (SIP) is designed to be an all-employee plan, the employee qualifying conditions are not particularly onerous ― the qualifying conditions for the company operating the SIP and the parameters for the design of the plan itself are much stricter. ITEPA 2003, Sch 2, paras 13 to 18A (Part 3) establishes the eligibility of individual employees to receive SIP awards.

All-employee plan

With some specific exceptions, all employees must be offered SIP awards on the same terms. The main exception is that the number of free shares offered to each employee can be calculated by reference to existing remuneration, length of service and/or hours worked. Senior employees or directors cannot have priority to SIP awards.

No loans

No loans can be made to employees to facilitate SIP awards.

Eligibility at the appropriate time

Before any SIP award is made, an employee must be eligible to receive that SIP award at a specified time, called the ‘appropriate time’. Table 1 sets

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Helen Wood

, Employment Tax

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