Part 7Employment income: share-related income and exemptions

Chapter 6Approved share incentive plans

Introduction

488Approved share incentive plans (SIPs)

1

This Chapter provides—

a

for the approval of share incentive plans (“SIPs”) by the Inland Revenue,

b

for exemptions from income tax in connection with shares obtained under those plans,

c

for amounts to count as employment income in certain circumstances in connection with such plans, and

d

for the making of PAYE deductions in connection with such amounts.

2

Schedule 2 contains the requirements that have to be met for a SIP to be approved, together with—

a

the approval procedure, and

b

provisions relating to the administration and operation of a SIP.

3

The provisions of—

a

this and the following sections of this Chapter,

b

Schedule 2, and

c

the provisions mentioned in section 515 (tax advantages and charges under other Acts),

together constitute “the SIP code”.

4

In the SIP code—

  • “approved” means approved by the Inland Revenue under Schedule 2, and “approval” has a corresponding meaning;

  • “PAYE deduction” means a deduction required by PAYE regulations;

  • a “share incentive plan” (or “SIP” for short) means a plan established by a company providing—

    1. a

      for shares to be appropriated to employees without payment (“free shares”), or

    2. b

      for shares to be acquired on behalf of employees out of sums deducted from their salary (“partnership shares”).

5

Other expressions used in the SIP code and contained in the index at the end of Schedule 2 have the meaning indicated by the index.