Share Ownership
• employers may give employees free shares up to a permitted annual maximum (£3,600 from April 2014, £3000 prior) • employees may purchase ‘partnership’ shares out of pre-tax (and NICs) income (including annual bonuses) up to a maximum annual limit (£1,800 from April 2044, £1,500 prior) (or 10% of salary, if less). • employers may match an award of partnership shares with an annual award of ‘matching’ shares up to the maximum threshold of 2 free shares per partnership share purchased • dividends where paid may be reinvested in further shares free of tax, up to certain limits, and must normally be held for a minimum period of three years • all such shares held for a period of five years are exempt from both Income Tax, capital gains tax and NICs. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS A statutory Corporation Tax deduction for the costs of providing shares is available for accounting periods starting on or after 1st January 2003. Reduced gross pay due to SIP contributions can affect entitlement to earnings related benefits such as SSP. Share Ownership Maxima from 6th April 2014 Employee Employer Date from Free Share Partnership Share Matching Share Annual Maxima Annual Maxima Annual Maxima £ £ £ 06/04/2014 3,600 1,800 or 10% of salary 3,600 Savings Related Share Option Schemes (SAYE) A scheme where employees have a fixed deduction from pay up to a maximum limit of £500 per month (£250 prior to 6th April 2014) with the option of buying shares at a price fixed (the market value at the time of commencement of the plan or at a discount of no more than 20%), with the accrued savings at the end of the savings period. From April 1996 the savings period is either three or five years. There is no tax or NICs payable when options under SAYE Scheme are received. However, Capital Gains Tax may be charged where the option is exercised. The employer completes Form 34 at the end of the tax year. No printing, copying or reproduction permitted.
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