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

Transfer of assets to beneficiaries ― legal, administration and tax issues

Transfer of assets to beneficiaries ― legal, administration and tax issuesThis guidance note outlines how assets are transferred to beneficiaries and the tax consequences that flow from the transfer. Whether a payment is income or capital is discussed in the Payments to trust beneficiaries guidance

14 Jul 2020 13:52 | Produced by Tolley Read more

Trusts and Inheritance Tax

Settlor-interested trusts

Settlor-interested trustsWhat is a settlor-interested trust?A settlor-interested trust is one where the person who created the trust, the settlor, has kept for himself some or all of the benefits attaching to the property which he has given away. A straightforward example is where a settlor

14 Jul 2020 13:38 | Produced by Tolley Read more

Owner-Managed Businesses

Tax implications of administration and liquidation

Tax implications of administration and liquidationThis guidance considers the tax implications of a company going into administration or liquidation.Introduction to company administration and liquidationCompany going into administrationA company which is in financial difficulty may go into

14 Jul 2020 15:29 | Produced by Tolley Read more

��Ƶ

Common pitfalls and practical issues with SIPs

Common pitfalls and practical issues with SIPs