ERSM303200 - Approved Share Incentive Plans: Chapter 6 Part 7 ITEPA 2003 Approved Share Incentive Plans

This Chapter provides for the approval of Share Incentive Plans (SIP), for exemptions from income tax in connection with shares obtained under the plans, for amounts to count as employment income in certain circumstances in connection with such plans and for the making of PAYE deductions in connection with such amounts. The requirements for approval are set out in Schedule 2 (see below). The circumstances in which shares ceasing to be subject to the plan are exempt from income tax are in section 497 where shares are held in the plan for 5 years and section 498 where the participant ceases to be in relevant employment due to:

• Injury or disability
• Redundancy
• Transfer of employment where TUPE applies
• A change of control of the associated company in which the relevant employment is held
• Retirement on or after reaching the specified retirement age
• Death

Section 500 sets out the scope for when tax charges will apply in connection with an approved SIP.

Sections 501-504 set out the charges in connection with the holding of shares subject to the relieving sections 489-498.

Sections 505-508 set out the charges in connection with shares ceasing to be subject to the plan unless section 498 applies.

Sections 509-514 deal with the operation of PAYE by the employing company and in certain circumstances by the trustees of the associated trust.

Section 515 sets out the tax advantages and charges under other Acts.