Sharing the growth – 10 reasons to consider an all employee Share Incentive Plan

Recently we’ve been getting a lot of enquiries about all employee share plans.  The Share Incentive Plan (SIP) in particular seems to be ticking a lot of boxes for companies, both private and listed.

Here are just ten factors explaining why companies use SIPs to motivate and reward all their employees:

  1. Great tax efficiency:  SIP is the only share plan in the UK that can deliver zero tax rates for employees
  2. Shareholder alignment:  direct shareholding helps employees think and act like owners
  3. Long term retention: maximum tax efficiency is delivered after 5 years, which means the SIP is a great way of retaining your staff
  4. Keeping control:  leavers can be required to sell shares back when they leave. In certain circumstances shares can be forfeited on leaving
  5. Flexibility:  you can use any type of shares, including those without voting rights. You can make different types of award each year to meet your corporate requirements
  6. Financial rewards: direct shareholdings can deliver dividend payments to participants
  7. Great for altruists: shares can be given free to employees, without any tax charge
  8. “Skin in the game”:  if financial commitment is preferred, businesses can require employees to buy shares. This can still be attractive for employees because shares are bought out of pre-tax salary
  9. Mix and match”: to encourage investment, employees can get up to 2 further free shares for each share that they buy
  10. Create internal market: leavers’ shares can be recycled for future awards

First introduced in 2000, the SIP is a tried and tested employee share plan.  It’s ideal for companies that want all of their employees to benefit from the rewards of share ownership.

RM2 designs, establishes and runs SIPs for both private and listed companies, including providing the trustee services needed to operate the plan.  We can help you decide whether the SIP is the best fit for you and your employees, talk you through the advantages of using Free, Partnership or Matching Shares, discuss and manage employee communications, and work with your payroll department to manage share purchases

If you’d like to find out more about the advantages of the SIP and whether it’s right for your business, there’s lots more information on our website here.  Alternatively, contact us on and one of our consultants will be happy to talk through the plan with you.