SIPs were initially introduced in 2000 as all-Employee Share
Ownership Plans and rebranded in 2001 as SIPs. They provide all
employees with an opportunity to own shares in their employing
company or, if a group of companies, in the parent company.
There is flexibility within the SIP for the employer to design
their plan to offer free shares to employees, or for employees to
purchase shares out of their gross pre-tax income and thus acquire
shares in a tax efficient manner.
It is possible to award shares with performance conditions
attached, although these must be objective to ensure it remains an
all employee share plan.
What is a SIP?
SIPs, which are commonly used by listed companies, are an HMRC
approved share acquisition plan designed to encourage employees to
own shares in their employing company and to participate in the
growth of the company. The plan must be set up in conjunction with
a trust. The employee can be granted shares subject to annual
limits:
