The All-Employee Share Ownership Plan introduced last summer has
been renamed the Share Incentive Plan (SIP) at the launch recently
of a nationwide roadshow to publicise the SIP. The government is
keen to promote this scheme as a more flexible share plan that
targets small companies. The chancellor, Gordon Brown, has said he
wants to double the number of workers joining an employee share
scheme to create a more entrepreneurial environment.
The SIP is a tax-advantageous plan to encourage employees to
hold shares in the company for which they work. The SIP legislation
includes provisions intended to make the scheme appealing to
smaller companies that may not previously have had an employee
share plan. It also has some special features to make a SIP
interesting to unlisted companies, which may not have a ready
market for their shares.
The SIP allows employers to offer workers free shares that are
tax-free if held for five years and to link the award of shares to
performance targets. In addition, an employer can claim relief
against corporation tax for the expenses of setting up and
maintaining a SIP. One advantage for employees is that they can put
their SIP shares into an individual savings account (ISA) as a way
of extending their ISA entitlement in any particular year.
