Budget 2010 – Share incentive plans
The Chancellor has announced a tightening up of the rules for Share Incentive Plans (SIP). The changes have been announced to combat abuse of the corporation tax deduction provision. This occurs where companies pay money to SIP trustees to buy shares from director-shareholders, even though no real value is transferred to employees under the SIP.
The legislation is to be introduced as part of Finance Bill 2010 which will also close other potential loopholes in the SIP provisions.
The changes will be effective in relation to payments made and alterations to share capital or rights attached to shares taking place on or after 24 March 2010.