Income Tax (Earnings and Pensions) Act 2003 section 11

Material interest: options and interests in SIPs

Section 11 clarifies how share options and Share Incentive Plan (SIP) trust holdings are treated when determining whether an individual has a material interest in a company under the 30% ordinary share capital test.

• A right to acquire shares, however it arises, is treated as a right to control those shares for the purposes of the material interest test.
• Where shares attributed to an individual include shares subject to an acquisition right that would require the company to issue previously unissued shares, the company's ordinary share capital is treated as increased by those unissued shares when applying the 30% threshold.
• The shares attributed to an individual include those of the individual's associates, and all such shares are taken into account when testing whether the 30% limit is exceeded.
• Shares held by Schedule 2 SIP trustees that have not yet been appropriated to, or acquired on behalf of, any individual — and any trustee rights arising from that holding — are disregarded when applying the material interest test.