What is a Share Incentive Plan (SIP)?

A SIP is a tax-efficient all-employee share plan that lets a company award shares to all eligible employees. Each participant can receive shares worth up to £9,000 per tax year.

Shares acquired by employees are held on their behalf in a SIP Trust.  Assuming the participant remains employed after five years they can be withdrawn from the trust/sold with no income tax or NICs due from either the employee or the company, and they are free of Capital Gains Tax for as long as they remain in the trust.

A SIP must be made available to all employees, although in a group it is possible to offer it only to specific subsidiaries.

Read more about Share Incentive Plans.