Income Tax (Earnings and Pensions) Act 2003 Schedule 2 paragraph 21

Material interest: options and interests in SIPs

Paragraph 21 of Schedule 2 explains how options and interests held under Share Incentive Plans (SIPs) are treated when determining whether an individual has a material interest in a company.

• When assessing whether someone has a material interest in a company, certain share options and SIP interests are excluded from the calculation.
• Options to acquire shares that have been obtained under specific tax-advantaged share schemes — namely SAYE option schemes (Schedule 3), CSOP schemes (Schedule 4), or enterprise management incentive (EMI) schemes (Schedule 5) — are not counted.
• Shares held on behalf of an individual by the trustees of a Share Incentive Plan (SIP) are also disregarded when determining material interest.
• This ensures that participation in approved employee share schemes does not inadvertently disqualify someone from eligibility for a SIP by pushing them over the material interest threshold.