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16A.6 Approved Share Incentive Plans Formerly All Employee Share Schemes FA 2000 |
16A.6.1 Introduction |
FA 2000 introduced yet another scheme, originally called an all employee share plan and now an Approved Share Incentive plan or SIP. The plan will eventually cost around £400 m a year and it is expected that around 625,000 employees will own shares in their companies for the first time.94 If the conditions are observed, all shares in the plan, held for 5 years, will be completely free of income tax and CGT while so held.95 |
The plan may contain three elements each with its own rules.96 These are called free shares, partnership shares and matching shares; there is also a fourth category comprising dividend shares. |
The plan may be on a group basis.97 It needs to be approved by the Revenue.98 It must have a purpose as defined by the legislation, to provide benefits to employees in the nature of shares which give them a continuing stake in the company; it must not have features which are neither essential nor reasonably incidental to that purpose.99 |
The plan must be available to all employees within schedule E, case I who meet certain conditions of eligibility.100 There must be no preferential treatment of directors, no further conditions and no loan arrangements.101 The employee may not also have any options held |