ESP-Software evolved from the need to make the administration of employee share plans simple and to give control of the employee share plans to companies wishing to administer their own plans.
Here, you can learn more about us.
Click here to learn more about The Share Incentive Plans Software (SIPS). And see the demonstration video.
FAQ: Partnership shares
You can buy partnership shares using your gross pay. However, the limits on how much you can spend on partnership shares are the lower of:
• £1,500 per tax year, or
• 10% of your total salary for the tax year.
Your employer may specify whether all or only part of your salary is to be used when calculating the maximum percentage of salary to be spent on partnership shares. For example a scheme may exclude a particular description of earnings, such as overtime or bonus payments.
Buying shares using your gross pay means that you will not have to pay income tax or National Insurance contributions (NICs) on the money that you use to buy them. NICs savings may not affect you if you would not have paid NICs on the money because you earn below the employee earnings threshold. Tax savings may not affect you if you earn below the personal allowance.
Source: Inland Revenue
A Share Incentive Plan, provided that it is approved by the HM Revenue & Customs,
can provide tax advantages to both the employees and the company directors.
One of the obligations to get your share incentive plan approved is to invite all of your employees.
The Share Incentive Plan legislation provides for three main types of plan shares to be used. They are:
- free shares - employers can give each employee free shares worth up to £3,000
- partnership shares - employees can use up to £1,500 per year out of pre-tax and pre-National Insurance Contributions (NICs) pay to buy partnership shares
- matching shares - employers can give matching shares at a ratio of up to two matching shares for each partnership share bought by the employee
- dividend shares - employees may be allowed to use up to £1,500 of dividends from their plan shares each year to buy further shares in the company through the plan
£9,000 each year - A tax free investment as shares should be very encouraging!
All an employee needs to do is to keep the shares in the plan as long as possible (usually 5 years) to pay less tax and NICs when he finally takes them out.
Please refer to IFS ProShare's briefing on SIPs for more information.
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