BIM44045 - Specific deductions - employee share schemes: Contributions to SIP trusts, a/c periods starting before 1 Jan 2003 - introduction

Share Incentive Plans (SIPs) are “all employee” share award plans introduced by FA00/SCH8 (now ITEPA03/SCH2). They were originally known as All Employee Share Ownership Plans (AESOPs).

The Employee Share Schemes Unit, Capital & Savings, Somerset House deals with the approval of schemes and notifies offices dealing with participating companies when schemes are approved.

Under SIP schemes:

• companies can give up to £3000 worth of ‘free shares’ a year to each employee;
• employees can buy up to £1500 worth of ‘partnership shares’ a year;
• companies can reward this commitment by giving up to 2 ‘matching shares’ for each partnership share an employee buys.

The following paragraphs give guidance on deductions for contributions to trusts set up in conjunction with approved SIPs:

This guidance also applies in computing employers’ taxable profits for periods starting on or after 1 January 2003. The SIP code has its own CT deduction rules which are the same for all periods and are not affected by other changes made from 1 January 2003.