29. SHARE INCENTIVE PLANS (SIP)

Question 1

max value of free shares each year?

Answer 1

3.6k

Question 2

max value of partnership shares

Answer 2

10% of salary plus bonus or 1.8k (lower of)
plus two further matching shares to the employee for each partnership share

Question 3

how to deal with income tax when free shares from a Share Incentive Plan are sold

Answer 3

< 3 y - tax on market value at withdrawal
3-5 y - lower of MV at withdrawal and MV at allocation
> 5 y - no income tax (though still CGT)

Question 4

how to deal with income tax when partnership shares from a Share Incentive Plan are sold

Answer 4

< 3 y - tax on market value at withdrawal
3-5 y - lower of MV at withdrawal and amount used to purchase originally
> 5 y - no income tax (though still CGT)

Question 5

how to deal with income tax when dividend shares from a Share Incentive Plan are sold

Answer 5

< 3 y - dividend used to buy shares becomes taxable
3-5 y - no tax
> 5 y - no tax

Question 6

how to deal with income tax when matching shares from a Share Incentive Plan are sold

Answer 6

same as free shares

< 3 y - tax on market value at withdrawal
3-5 y - lower of MV at withdrawal and MV at allocation
> 5 y - no income tax (though still CGT)

Question 7

is NIC chargeable as well as income tax for SIPs?

Answer 7

yes apart from dividend shares which never attract NIC