Share Incentive Plan (SIP)

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A way for companies to give shares tax-free to its employees.
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If you keep the shares for more than 5 years, you won’t pay Income tax or national insurance on them. You won’t also pay CGT if they’re kept in the SIP, till you sell them.
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Ways to get the shares under the share incentive plan:

• Free shares: your employer can give you up to £3,600 of free shares per year
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• Partnership shares: Shares can be bought out of your gross salary, but they can only be worth upto £1,800 or 10% of your pay for the year, whichever is lower
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• Matching shares: you employer can offer you up to 2 free matching shares for each partnership share bought
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• Dividend shares: If the company pays dividends and you own free, partnership or matching shares, their dividends can be reinvested into buying more company shares, but they have to be kept in the SIP for 3 yrs.
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