Income Tax (Earnings and Pensions) Act 2003 section 34

Free shares: introduction

Section 34 sets out the requirements that a Share Incentive Plan (SIP) must meet when it includes free shares, and the additional requirements that apply when performance allowances are also used.

• A SIP that offers free shares must comply with rules on the maximum annual award and the holding period
• Where performance allowances are also included, additional requirements apply covering general application, targets and measures, employee information, and methods of awarding shares
• A plan is considered to include performance allowances if the award of free shares, or their number or value, depends on meeting performance targets
• The plan must satisfy all relevant requirements set out in the applicable paragraphs

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