Share incentive plans (SIPs) enable qualifying employees of a company to buy shares in either their employer company or, in the event of a group plan, the holding company. All employees in the UK whose wages are subject to income tax must be eligible to participate in SIPs. 

Employees who participate in Share incentive plans may be eligible to receive up to £3,600 worth of “free shares” each tax year, and they may use their pre-tax income to purchase up to £1,800 worth of “partnership shares” each year. For each partnership share employee purchase, companies can provide a maximum of two additional ‘matching shares.’ The maximum possible cumulative entitlements in any tax year under a SIP if the employer chooses to exercise free partnership and match shares to their full potential is £9,000. Investing in stocks and bonds through a SIP can be tax-free if certain conditions are satisfied. 

A SIP is an all-employee programme and must thus be offered to all employees under the same conditions. The company has the right to impose a qualifying work duration of up to 18 months.  A trust structure is used in the Share incentive plans. A UK-based employee trust will acquire, or subscribe for, the shares to be used for the aims of the SIP and will retain the shares on behalf of employees.