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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Schedule 2 share incentive plan (SIP): Types of award: Free shares: Performance allowances – Method 2

Under Method 2, the company can award some or all the shares according to performance. In this case, all the employees within a performance unit must take part on the same terms. However, for this purpose, the free shares awarded to each performance unit are treated as a separate award.

If different targets are set for different performance units they must be “consistent”, that is the targets must be equally capable of being met (paragraph 42(6)). The setting of targets that could not reasonably be viewed as consistent at the time they were set would not meet the requirements of the legislation.