How can an employee stop salary deductions under a partnership share agreement?

Under section 54 of ITEPA 2003, an employee may give written notice to the company at any time to stop salary deductions under a partnership share agreement. The company must cease deductions within 30 days of receiving the notice, unless the employee specifies a later date in their notice.

Can an employee make up missed deductions after re-starting under a share incentive plan?

No. Under section 54 of ITEPA 2003, an employee who has stopped and then re-started salary deductions under a partnership share agreement cannot make up any deductions missed during the period when deductions were halted. Those missed contributions are lost permanently and cannot be recovered.

Are there limits on how often an employee can re-start deductions during an accumulation period?

Yes. Where a share incentive plan includes accumulation periods, the plan rules may restrict an employee from re-starting deductions more than once within any single accumulation period. This prevents employees from repeatedly stopping and starting deductions within the same accumulation window.

What is the re-start date for resuming partnership share deductions?

The re-start date is defined as the date of the first deduction due under the partnership share agreement that falls more than 30 days after the company receives the employee's written re-start notice. The company must resume deductions no later than this date, unless the employee specifies a later date.

Income Tax (Earnings and Pensions) Act 2003 section 54

Stopping and re-starting deductions

Section 54 sets out the rules governing how employees can stop and subsequently re-start salary deductions under a partnership share agreement within a share incentive plan.

An employee may give written notice at any time to stop deductions, and the company must cease deductions within 30 days of receiving the notice unless a later date is specified
An employee who has stopped deductions may give written notice to re-start them, but cannot make up any deductions missed during the period when deductions were halted
Where the plan includes accumulation periods, it may restrict an employee from re-starting deductions more than once in any single accumulation period
On receiving a re-start notice, the company must resume deductions no later than the first deduction date falling more than 30 days after receipt of the notice, unless a later date is specified

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