Employee share schemes

Supporting you to do the best for your employees

At Price Bailey, we understand that you want to reward your hard-working employees and we can help you in implementing a share scheme, leaving you stress-free and with more time on your hands. 

Share incentive plans (SIPs) include three elements you can combine in different ways to suit your business (limits are for each employee):

  • free shares up to a limit of £3,000 in any tax year
  • partnership shares (bought out of pre-tax and NIC salary) up to £1,500 in any tax year (or 10% of overall salary, whichever is lowest); there might be a minimum limit of up to £10 on any occasion, and shares can be bought annually rather than monthly.
  • matching shares, which your company provides to match employees’ purchase of partnership shares, up to a limit of two for each partnership share purchased; again there’s a limit of £3,000 in any tax year.

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The plan must be made available to all employees, but you can set a qualifying period of up to 18 months. You can vary the value of the free shares you give to each employee on the basis of remuneration, length of service, hours worked, or performance.

Employees taking part must not have a material interest in the company (that is, owning or controlling more than 25% of its ordinary share capital). This also applies to the preceding 12 months.

For free and matching shares, employees are contractually bound to keep them in the plan for between three and five years. The shares can be dividend shares, and you can choose to make dividend reinvestment compulsory or optional. Total dividend reinvestment for any participant must not exceed £1,500 in a tax year. The holding period for dividend shares is three years.

Shares have to come out of the plan when employees leave their job. You can decide whether employees lose their free or matching shares if they leave within three years, and whether employees who leave have to sell their shares.

Our SIP specialists have long-standing experience creating and implementing share schemes for varying businesses both regionally and nationally. If you would like to discuss SIP further you can contact us using the form below.  

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