Income Tax (Earnings and Pensions) Act 2003 section 46

Maximum amount of deductions

Section 46 sets out the maximum limits on how much partnership share money can be deducted from an employee's salary under a Share Incentive Plan, and what happens if those limits are exceeded.

• Partnership share salary deductions are capped at £1,800 per tax year and must not exceed 10% of the employee's salary for that tax year
• The company's plan may set lower limits than these statutory maximums, and different limits may apply to different share awards
• A lower percentage limit can be achieved either by substituting a lower percentage or by excluding certain types of earnings from the definition of salary
• Any amount deducted in excess of the permitted limits must be repaid to the employee as soon as practicable, and the Treasury may amend the £1,800 cap by order