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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Schedule 2 Share Incentive Plan (SIP): Tax advantaged status: Notification

From 6 April 2014 a SIP is a “Schedule 2 SIP” if the company has given notice of the plan to HMRC and confirmed that it meets the requirements of parts 2-9 of Schedule 2 (paragraph 1(4)) within the appropriate time limit (paragraph 81A(6)). The requirements of Part 2 are extended to include paragraphs 89 and 90 Schedule 2 (plan termination notices, etc. – paragraph 6(2)).

The SIP is a Schedule 2 SIP from the date of the notice or, if the notice is given after the date of the first award (provided this is within the appropriate time limit), from the date of the first award (paragraph 81A(4)).

Notice must be given by 6 July following the end of the tax year in which the first award of shares is made under the plan. If notice is given after this date, the SIP can only be a “Schedule 2 SIP” from the tax year in which the notice is given (paragraph 81A(5)).


The notice must contain a declaration by the company confirming that the SIP scheme meets the requirements of parts 2-9 of Schedule 2 at the time the notice is given.

Where notice is given after the date of the first award of shares, the company must certify that the requirements were met:

  • At the time of the first award, and
  • At all other times after the first award when shares were held in the plan.

Shares appropriated or acquired before 6 April 2014 under a SIP approved by HMRC before that date are deemed to be appropriated or acquired under a Schedule 2 SIP (paragraph 94(5) Schedule 6 FA2014). Exemptions from income tax and other provisions within Chapter 6 of Part 7 of ITEPA therefore apply to these shares.   

The review document at ETASSUM28210 can be used when considering whether the legislation governing a Schedule 2 SIP is satisfied.

Guidance on establishing schemes is at ETASSUM20120.

Foreign companies may wish to establish a Schedule 2 SIP for employees of their UK subsidiary companies. Whilst it will be rare for a foreign scheme to satisfy the requirements of Schedule 2 without modification, it may be possible for:

  • the subsidiary company or companies to set up free-standing SIPs which fully satisfy Schedule 2,  or
  • an addendum to be made to the parent company’s foreign scheme, to disapply the unacceptable features of the foreign scheme and to import the rules which are required to satisfy Schedule 2.


Guidance on registering and self-certifying schemes can be found here: