All Employee Share Plans
Read our guide to Employee Share Plans. If you would like to speak to someone about which plan(s) will suit your company and its objectives, please contact our Employee Share Plan team.
Share Incentive Plan ("SIP")
The SIP is an HMRC approved tax efficient, all employee plan, which provides companies with the flexibility to tailor the plan to meet their business needs. There are 4 main elements to the SIP, companies can choose to use one or more of the following:
- Free Shares
- Partnership Shares
- Matching Shares
- Dividend Shares
The SIP gives companies the ability to gift up to £3,000 of shares to each employee (Free Shares) each tax year.
Employees can also be given the opportunity to buy shares with up to £1,500 of pre-tax salary in each tax year (Partnership Shares). Where one Partnership Share is purchased companies can award a maximum of two shares for free in return (Matching Shares).
Dividends paid on SIP shares can be used to buy up to £1,500 worth of additional shares in each tax year (Dividend Shares).
Shares in the SIP must be held in trust.
Please register to access our free employee share plan fact sheets. We will not pass your details on to any other organisations or third parties. SIP Factsheet
Save As You Earn ("SAYE") / Sharesave
The SAYE is an HMRC approved plan that allows employees to enter into a savings contract for 3 or 5 years. The accumulated savings (plus a tax free bonus – see below) can then be used to fund an exercise of options and purchase of shares.
If an employee decides to participate in a company’s SAYE plan they will be granted an option to buy shares at a later date as prescribed by the company. The option vesting period can be 3, 5, or 7 years.
The options can be granted at a discount of up to 20% of the market value of the shares at the date of grant. Participants decide at the outset how much money to contribute from their post tax salary each month - the minimum amount is £10 and the maximum is £250.
At the end of the savings period the participant receives a tax free cash bonus on their savings. The amount of bonus is set annually by HMRC. A participant who has signed up for a 3 year option will receive the bonus at the end of 3 years, a 5 year option attracts a bonus at the end of 5 years, whilst a 7 year option allows the participant to save money for 5 years and attracts the bonus at the end of 7 years.
If the participant wants to exercise their option to buy shares, he or she uses the accumulated savings plus bonus to fund the exercise price. All gains realised at this point will be free of Income Tax and NIC liabilities, and subject instead to CGT when shares are sold. Alternatively, the participant can withdraw their savings and bonus and allow the option to lapse.
SAYE plans are generally administered by banks and building societies which can provide the necessary savings accounts.
Please register to access our free employee share plan fact sheets. We will not pass your details on to any other organisations or third parties. SAYE Factsheet