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HMRC internal manual

Compliance Operational Guidance

Supporting guidance: employer compliance guidance by subject: employment related securities: Schedule 2 Share Incentive Plan (SIP): overview

A company must give notice of a Share Incentive Plan (SIP) by 6 July, following the end of the tax year in which the first award of shares is made under the plan (paragraph 81A to Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003, see ETASSUM20110).

Where notice of the plan is made after this date, the SIP will only be tax advantaged from the tax year in which the notification is made. Tax advantaged status cannot be given retrospectively. For example, the first award of shares is made during 2014-15. The company must notify HMRC of the SIP by 6 July 2015. If the company does not give notice until 31 January 2016, the SIP is only tax advantaged from 2015-16.

HMRC can enquire into the SIP:

  • to make sure the plan meets the legislative requirements
  • to check whether the plan has been operated in accordance with the plan rules.

Following declaration of the SIP, the company must submit annual returns, including nil returns, ending with the year in which the termination condition is met, see ETASSUM11700.