Income Tax (Earnings and Pensions) Act 2003 Schedule 2 paragraph 30

Only certain kinds of restriction allowed

Paragraph 30 of Schedule 2 sets out the rules governing what types of restrictions may be attached to shares held in a Share Incentive Plan (SIP), ensuring that only certain permitted restrictions apply.

• Shares held in a SIP may only be subject to restrictions that apply to all shares of the same class, or that are specifically required under the SIP rules set out in the legislation.
• Any restriction attached to SIP shares must not make those shares materially different from other ordinary shares of the same class that are not subject to the restriction.
• The only permitted SIP-specific restrictions are those imposed by the plan rules themselves, such as requirements relating to holding periods or the handling of shares when an employee leaves the company.
• This rule was amended by the Finance Act 2013 and applies as part of the broader framework ensuring that SIP shares are genuinely ordinary shares that align with shares held by other shareholders.