Income Tax (Earnings and Pensions) Act 2003 section 45

Deductions from salary

Section 45 sets out how partnership share agreements under a Share Incentive Plan (SIP) must operate through salary deductions, including what must be specified in the agreement and how deduction amounts and intervals are determined.

• Partnership share agreements must be implemented through deductions from the employee's salary, with the deducted amounts known as "partnership share money"
• The agreement must specify both the amounts to be deducted and the intervals at which deductions occur, though these can be varied by mutual agreement between the employee and the company
• Deduction amounts may be expressed as a fixed sum or as a percentage of the employee's salary
• The employer company must calculate amounts and intervals with regard to the maximum deduction limits set out in paragraph 46