ESP-Software evolved from the need to make the administration of employee share plans simple and to give control of the employee share plans to companies wishing to administer their own plans.
Here, you can learn more about us.
Click here to learn more about The Share Incentive Plans Software (SIPS). And see the demonstration video.
FAQ: What are the advantages?
If you receive free shares in the company you work for, you usually have to pay income tax and NICs on them because they are part of what you earn from your job. However, if you take part in a Share Incentive Plan, you will not have to pay income tax or NICs on the value of free or matching shares awarded to you. The longer you keep the shares in the plan, the less tax and NICs you will pay when you finally take them out.
Your plan shares are held in a trust for a holding period of at least three years. Your employer can increase this holding period to up to five years. You can take your partnership shares out of the plan at any time, but you will normally have to pay some tax and NICs on them if you take them out less than five years from the date that you bought them.
To get full income tax and NICs advantages, you will have to keep all the shares in the plan for at least five years (or three years for dividend shares). These time limits are explained in the table below.
If you keep your shares in the plan until you sell them, you will not have to pay Capital Gains Tax (CGT) on the gain you make, however much the shares grow in value.
Source: Inland Revenue
A Share Incentive Plan, provided that it is approved by the HM Revenue & Customs,
can provide tax advantages to both the employees and the company directors.
One of the obligations to get your share incentive plan approved is to invite all of your employees.
The Share Incentive Plan legislation provides for three main types of plan shares to be used. They are:
- free shares - employers can give each employee free shares worth up to £3,000
- partnership shares - employees can use up to £1,500 per year out of pre-tax and pre-National Insurance Contributions (NICs) pay to buy partnership shares
- matching shares - employers can give matching shares at a ratio of up to two matching shares for each partnership share bought by the employee
- dividend shares - employees may be allowed to use up to £1,500 of dividends from their plan shares each year to buy further shares in the company through the plan
£9,000 each year - A tax free investment as shares should be very encouraging!
All an employee needs to do is to keep the shares in the plan as long as possible (usually 5 years) to pay less tax and NICs when he finally takes them out.
Please refer to IFS ProShare's briefing on SIPs for more information.
Beat the recession!
Beat the recession and save on outsourcing costs by taking control and managing your SIP in-house with our SIP software.