Income Tax (Earnings and Pensions) Act 2003 section 63

Requirements to be met as regards cash dividends

Section 63 sets out the plan requirements that must be met when a Share Incentive Plan (SIP) includes provision for the reinvestment of cash dividends into further shares.

• Where a SIP allows reinvestment of cash dividends, it must comply with the requirements in paragraphs 65 to 68 covering general rules on dividend shares, their acquisition, holding periods, and carried-forward amounts.
• The plan must satisfy all specific plan requirements contained within those paragraphs.
• Every SIP must also meet the requirement in paragraph 69, which ensures that participants are not compelled to reinvest their cash dividends.
• Paragraph 69 applies to all SIPs regardless of whether or not the plan includes a dividend reinvestment facility.