Common pitfalls and practical issues with SIPs

Produced by Tolley in association with

Employment Tax

Guidance

Most employee share plans (including Share Incentive Plans (SIPs)) are well designed and implemented. However, there are some things which can trip up even the most well-meaning of employers.

This list covers some problems that companies, scheme administrators and advisers may encounter.

Failing to provide a market for employee shares

Where a listed company operates a SIP, there is a readily available market for the employees’ shares at the end of the holding period. However, where a private company or a company listed on a junior market with less liquidity operates a SIP, significant thought must be given to how employees will realise cash or otherwise benefit from their SIP awards.

There are a number of possible ways to deal with this, in common with other employee share schemes operated by private companies. Some examples include:

•
allow the sale of shares only on an exit event or when leaving the company
•
create a market by funding the SIP trust to buy back and recycle shares for future

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Helen Wood

Founder, HLN WD TX , Employment Tax

Helen Wood is the founder of HLN WD TX, a share schemes and employee incentives advisory business.She qualified as a CA with ICAS in 2009 and has worked as a specialist reward and incentives advisor for 17 years, spending 13 of those at KPMG followed by 3 ½ years as an Associate Director at RSM. Helen has worked with businesses ranging from start-ups to fully listed companies, spanning owner-managed businesses, private equity portfolio companies, and AIM listed businesses.She advises on a wide range of employee share schemes and employment related securities matters including the design and implementation of effective management and employee incentives; tax valuation of employment related securities, buy and sell side transaction support, HMRC compliance, tax due diligence and employee ownership trust transactions.

Popular Articles

Trusts and Inheritance Tax

Holdover relief for disposals by trustees

Holdover relief for disposals by trusteesOverviewWhere a capital gain has been realised on an asset that has been disposed of and that disposal was not for full value (that is not in an arm’s length sale) then holdover relief may be available. This will happen when trustees appoint capital assets

14 Jul 2020 11:54 | Produced by Tolley Read more

Corporation Tax

Temporary differences

Temporary differencesCalculation of temporary differencesThe temporary difference arising in respect of an asset or liability is calculated by comparing the carrying value of that asset or liability with its tax base.IAS 12 uses the concept of taxable or deductible temporary differences. Whether a

14 Jul 2020 13:49 | Produced by Tolley in association with Malcolm Greenbaum Read more

Corporation Tax

Entity classification

Entity classificationImplications of entity classificationIf a subsidiary is established, it is important to determine how it will be treated for UK tax purposes as this will determine the basis on which it is taxed. A subsidiary may either be transparent (like a partnership, where the individual

14 Jul 2020 11:37 | Produced by Tolley Read more

UU��ֱ��

Common pitfalls and practical issues with SIPs

Common pitfalls and practical issues with SIPs