Income Tax (Earnings and Pensions) Act 2003 section 43

Partnership shares: introduction

Section 43 introduces the framework of rules that apply when a Share Incentive Plan (SIP) includes partnership shares, covering salary deductions, share acquisition, forfeiture restrictions, and the definition of salary for these purposes.

• Where a SIP includes partnership shares, the plan must comply with a series of detailed rules (paragraphs 44 to 57) covering agreements, salary deductions, accumulation periods, share limits, and employee withdrawal
• Partnership shares must not be subject to forfeiture, although the plan may require shares to be offered for sale at a price no less than the original cost or, if lower, their current market value
• References to trustees acquiring partnership shares on behalf of an employee include appropriating shares the trustees already hold
• For partnership share purposes, an employee's "salary" means PAYE-taxable earnings from the eligible employment, excluding benefits code items, regardless of whether the employee is actually within the charge to UK employment tax