Income Tax (Earnings and Pensions) Act 2003 section 38

Performance allowances: general application

Section 38 requires that where a Share Incentive Plan includes performance allowances for a particular award, those allowances must be made available to all qualifying employees in respect of that award.

• Performance allowances are an optional feature that a Share Incentive Plan may include in relation to a specific award of shares.
• If a plan does include performance allowances for a given award, the allowances cannot be restricted to selected employees only.
• All qualifying employees linked to that particular award must be entitled to the performance allowances on the same basis.
• This rule reinforces the principle that Share Incentive Plans must operate on an all-employee basis, preventing employers from using performance allowances to favour particular individuals or groups.