Share Incentive Plan (SIP) Calculator
Estimate your annual partnership shares, matching shares, Income Tax & NIC savings — in seconds.
📊 Your Annual SIP Benefit Estimate — 2025/26
| Component | Basis | Annual Amount |
|---|
How a Share Incentive Plan (SIP) Works — Tax Savings Explained
A Share Incentive Plan (SIP) is an HMRC-approved tax-advantaged share scheme that lets employees acquire shares in their employer company free of Income Tax and National Insurance Contributions (NICs), provided shares are held in trust for the required period. There are four types of SIP shares: Partnership, Matching, Free, and Dividend shares — each with distinct rules and annual limits.
Partnership Share Annual Limit:
Max Partnership = MIN(£1,800, Gross Salary × 10%)
Income Tax Saving (Partnership Shares):
IT Saving = Partnership Investment × Income Tax Rate
Employee NIC Saving:
NIC Saving = Partnership Investment × Applicable NIC Rate
Matching Shares Value:
Matching Value = Partnership Investment × Matching Ratio (max 2×)
Total Annual Share Value:
Total = Partnership + Matching + Free Shares + Dividend Shares
Net Cost to Employee:
Net Cost = Partnership − IT Saving − NIC Saving
Because partnership share purchases are deducted from gross pay before Income Tax and NIC are calculated, a higher-rate (40%) taxpayer investing £1,800/year saves £720 in Income Tax and up to £216 in NICs — a combined saving of £936. Their £1,800 investment in shares effectively costs them only £864 out of pocket, yet they receive up to £5,400 in total share value if the employer matches at the maximum 2:1 ratio and awards the £3,600 free share allowance.
| Component | Annual Limit | Tax Treatment | Minimum Hold | Max Employer Contribution |
|---|---|---|---|---|
| Partnership Shares | £1,800 or 10% of salary | No IT, No NIC on purchase | No minimum (but IT/NIC due if <5 yrs) | N/A (employee buys) |
| Matching Shares | Up to 2× partnership shares | No IT, No NIC on award | 3–5 years (set by employer) | 2 shares per partnership share |
| Free Shares | £3,600 per tax year | No IT, No NIC on award | 3–5 years (set by employer) | £3,600 per employee |
| Dividend Shares | No limit | No IT if held ≥3 years | 3 years for IT exemption | N/A (re-invested dividends) |
| Employee NIC Rate (basic earnings) | £12,570–£50,270 | 8% (2024/25 reduced rate) | — | — |
| Employee NIC Rate (higher earnings) | >£50,270 | 2% | — | — |
Frequently Asked Questions
What is the maximum I can invest in partnership shares per year?
The statutory limit is the lower of £1,800 or 10% of your gross annual salary per tax year. For example, if your salary is £15,000, your cap is £1,500 (10%); if it is £30,000 or above, the £1,800 absolute cap applies.
How much Income Tax and NIC do I actually save on partnership shares?
Partnership share contributions are deducted from gross salary before tax, so a basic-rate (20%) taxpayer saves £360 in IT on a £1,800 investment; a higher-rate (40%) taxpayer saves £720. NIC savings depend on your earnings band: 8% (on earnings up to £50,270) or 2% above that threshold. Total combined saving for a 40% taxpayer at 8% NIC is up to £864 per year.
How long must shares stay in the SIP trust?
Free and Matching Shares must be held for a minimum of 3–5 years (the specific period is set by your employer's plan). Partnership Shares can be withdrawn at any time, but Income Tax and NICs become due if withdrawn within 5 years. Dividend Shares must be held for at least 3 years for Income Tax exemption.
What happens to my shares when I leave the company?
When you leave employment, all SIP shares are removed from the plan. If you leave within 5 years of acquiring them (3 years for dividend shares), Income Tax and NICs may be charged on the market value at the date of removal. If you hold shares until sale within the plan, no Capital Gains Tax applies. Transferring to an ISA within 90 days of leaving the plan also exempts you from CGT.
Are free shares subject to Income Tax?
No — provided they are kept in the SIP trust for the required holding period (3–5 years set by your employer). If you take free or matching shares out of the plan before the minimum holding period expires, you will owe Income Tax and NICs on their market value at the time of withdrawal.
Can I use a SIP alongside other tax-advantaged schemes such as SAYE?
Yes. A SIP is completely separate from Save As You Earn (SAYE), Company Share Option Plans (CSOPs), and Enterprise Management Incentives (EMIs). Employees can participate in a SIP and other HMRC-approved schemes simultaneously, subject to each scheme's own limits. However, your employer must offer each scheme — you cannot enrol independently.
What is the CGT position when I sell SIP shares?
If shares are sold within the plan by the trustees, there is no Capital Gains Tax liability. If you take shares out of the plan and later sell them, your CGT acquisition cost is the market value on the date they left the plan — not your original purchase price. Transfers to a Stocks and Shares ISA within 90 days of leaving the plan also carry forward CGT exemption.