Module 7 - All Employee plans

Question 1

What is legislation for SIP?

Answer 1

Income Tax (Earnings and Pensions) Act 2003. Chapter 6 of Part 7. Schedule 2.

Question 2

Why SIP uses a special trust?

Answer 2

Company cant give shares for free except for treasury or trust. Holding vehicle. Legislation imposes restrictions and trustee must comply.

Question 3

Who cannot participate in the SIP?

Answer 3

1- employees who have not qualified, 2 - non UK employees (but can be added), 3- employees already in another SIP (but can join, IF LIMITS are aggregated)

Question 4

What is a constituent company?

Answer 4

a company in a parent group, company designated a constituent company. Cant pick the most highly paid employees company (think Computershare company tree). if JV, should be >50% owned

Question 5

SIP features - Free shares?

Answer 5

£3,600 max p.a. 18 max qualifying period, holding period - 3 Y. Tax free - 5Y.

Question 6

SIP features - Partnership shares?

Answer 6

£1,800 or 10%, the lower pre-tax salary deduction. 18 Max qualifying period (6 months if accumulation applied). No holding period. Tax free - 5Y.

Question 7

SIP - how partnership shares are acquired?

Answer 7

1- after deduction, market purchase, 2- end of accumulation period (start, lower of the two, end price)

Question 8

SIP Matching shares - rules?

Answer 8

Only to match partnership, 2 shares max, Holding period - 3Y, tax free - 5Y, forfeiture possible

Question 9

SIP - Dividend shares

Answer 9

Tax free - 3Y. no limits

Question 10

SIP tax on partnership shares

Answer 10

Within 3Y: market value on exit. 3-5Y: sum of salary deductions or market value (lower of the two)

Question 11

Dividend tax

Answer 11

£2,000 tax free allowance, then 7.5%, 32.5% or 38.1%

Question 12

SIP Good leavers - who are they?

Answer 12

1- Disability, death, injury, 2 - redundancy 4 - retirement 5 -TUPE transfer 6 - transfer of employing Co outside the group

Question 13

TUPE - what is it?

Answer 13

Legislation called the Transfer of Undertakings (Protection of Employment) Regulations 2006 or “TUPE” apply where a business or part of a business is sold. Under TUPE, the employment of the employees working in that business transfer automatically to the new owner (the transferee)

Question 14

SIP - takeover of a [parent company scenarios

Answer 14

1- Share for share, 2 - share for cash

Question 15

Who are SAYE eligible?

Answer 15

all employees BUT part-time directors, not qualified and non UK- tax resident (but can be invited)

Question 16

SIP and Share save shares

Answer 16

1- ordinary shares 2-listed shares 3 - with restrictions if restrictions are notified 4- fully paid, not redeemable 5 if more than 1 class of shares exist, then “open market” or “employee control shares”

Question 17

SAYE limits

Answer 17

500£ per month

Question 18

SAYE option price

Answer 18

Max 20% discount on invitation or grant date, NO LATER than 30 days since valuation (or 42 days if scaling down).

Question 19

SAYE grant process

Answer 19

option certificate, no need to have a deed

Question 20

SAYE saving holiday?

Answer 20

12 months

Question 21

SAYE exercise and tax

Answer 21

6 months window, no income tax and never NIC, no CTG if transferred to ISA within 90 days

Question 22

SAYE termination and exercise rule

Answer 22

Death - 12 months from maturity (if died within 6 months from maturity date) and 12 months from death date, Good leaver - 6 months and within 6 months from maturity

Question 23

Self -assessment deadlines

Answer 23

31 October for paper and 31 January for electronic

Question 24

SAYE tax

Answer 24

no income tax if after 3 years, never NIC

Question 25

SAYE registration deadline

Answer 25

deadline 6 July after tax year in which awards were made

Question 26

SAYE penalty for late registration

Answer 26

start with 100£, 3M- 300£, 6M-300£, 9M-10£ per day for LATE registration, discretionary for INCORRECT return £5,000.

Question 27

What documents are required for SIP?

Answer 27

Trust deed, rules, invitation, booklet, free and partnership share agreement, DRIP documents,