Key facts:
A SIP involves the establishment of a trust. The trustee can then award employees “free shares” worth up to £3,000 per tax year. Employees can also deduct up to £1,500 in any tax year from their gross salary to buy “partnership shares”. Money deducted in this way is exempt from PAYE and National Insurance Contributions. The trustee can match each “partnership share” with up to two free “matching shares”. Companies can either reinvest any dividends on the SIP shares on further shares, or pay the dividend straight to the employees.
A SIP must be approved by HMRC. Plan shares must not be subject to any “restriction” other than restrictions affecting all of the company’s ordinary shares and those expressly permitted in the legislation.
Who can benefit?
A SIP must be offered to all employees and requires a written trust deed.
Emma Cameron
Matthew Arnold & Baldwin LLP is a limited liability partnership registered in England & Wales (registered Number: OC343595) and is authorised and regulated by the Solicitors Regulation Authority. SRA Number: 508037. A list of members (and any non-members who are designated as partners) of Matthew Arnold & Baldwin LLP is open to inspection at the LLP’s registered office: 21 Station Road, Watford, WD17 1HT, United Kingdom. We use the word “partner” to refer to a member of the LLP or an employee or consultant with equivalent standing and qualifications.
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