Don’t slip up with your SIP administration

Administering a Share Incentive Plan (SIP) is easy, isn’t it? It can be done in house, can’t it?

Like most things, the answer is yes, but only if you know what you are doing! A client recently asked us to help remedy some issues they had with their SIP administration which they had attempted to perform on a spreadsheet in-house.

  • Issue 1. Free, Partnership and Matching shares, although reported correctly on the HMRC share plan return, had not been withdrawn from the plan when participants left employment (both good and bad leavers).
    We assisted by quickly ascertaining what awards should have been forfeited/lapsed, and which awards needed to be transferred to the ex-employee.
  • Issue 2. Income Tax and National Insurance deductions had not been calculated or paid to HMRC. We calculated the value of tax due to HMRC and provided guidance to the client on how this should be accounted for.
  • Issue 3. Drop in share price. Would you be able to compensate an ex-employee if the share price had dropped between the date the participant became entitled to the award and the date you finally provided them with their shares?
  • Issue 4. Was the SIP still a tax-advantaged plan for current participants, notwithstanding the errors in its administration? We provided the client with guidance and wrote to HMRC on their behalf.

If the burden of SIP administration is becoming too much, or if you have recently inherited the administration of a SIP onto your list of responsibilities and need some guidance, don’t hesitate to contact us and we can stop you slipping up.