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Share Incentive Plan (SIP) Calculator — UK Employee Shares

Calculate UK SIP shares from partnership, matching, and free shares, plus tax saved and tax owed by holding period under 2025/26 HMRC rules.

Updated

Capped at £1,800/year or 10% of salary, whichever is lower.

Capped at £3,600/year.

Total Shares Awarded This Year
480.0 shares (£2400.00)
240.0 partnership + 240.0 matching + 0.0 free
Immediate Tax Saved (pre-tax purchase)
£336.00
Tax If Removed Under 3 Years
£672.00

Hold all shares 5+ years and this entire £2400.00 is free of Income Tax and National Insurance on removal.

Based on HMRC Share Incentive Plan rules for the 2025/26 tax year. Between 3–5 years, tax applies to the lower of value at award or at removal (not modeled here — use the under-3-year figure as a worst-case estimate). Capital Gains Tax may also apply on any growth after shares leave the plan. This is a planning estimate, not tax advice — confirm your specific scheme rules and consult a tax adviser for your personal situation.
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Reference Values

Last verified:
Category Range What It Means Status
Held Under 3 Years Full Income Tax + NIC on removal value Removing shares before 3 years triggers Income Tax and National Insurance on the shares' market value at the date of removal — the least tax-efficient exit. Poor
Held 3–5 Years Income Tax + NIC on lower of award/removal value Tax is charged on whichever is lower: the value when the shares were awarded, or the value when withdrawn — partial protection if the share price has risen. Okay
Held 5+ Years ★ No Income Tax or NIC Shares held the full 5 years leave the SIP completely free of Income Tax and National Insurance — the full tax-advantaged outcome the scheme is designed for. ★ Best

Source: HMRC Share Incentive Plan (SIP) rules for the 2025/26 tax year: £3,600/year Free Shares limit, £1,800/year (or 10% of salary) Partnership Shares limit, up to 2:1 Matching Shares ratio

Worked Examples

Basic Rate Taxpayer — £100/mo Partnership, 1:1 Matching

Partnership Contribution
£1,200/yr
Matching Ratio
1:1
Share Price
£5
Tax Band
Basic (28% combined)
480 total shares (£2,400) · Immediate tax saved: £336 · Tax if sold under 3 yrs: £672

1,200 ÷ 5 = 240 partnership shares, matched 1:1 for another 240 shares = 480 total shares worth £2,400. Buying pre-tax saves £336 in Income Tax + NIC immediately. Holding 5+ years avoids the £672 tax bill entirely.

Higher Rate Taxpayer — Max Partnership, 2:1 Matching, Free Shares

Partnership Contribution
£1,800/yr (max)
Matching Ratio
2:1
Free Shares
£1,000/yr
Share Price
£10
Tax Band
Higher (42% combined)
640 total shares (£6,400) · Immediate tax saved: £756 · Tax if sold under 3 yrs: £2,688

180 partnership shares + 360 matching shares (2:1) + 100 free shares = 640 shares worth £6,400. At the higher-rate combined 42%, holding the full 5 years avoids £2,688 in tax that would otherwise apply on early removal.

How to Use This Calculator

  1. 1

    Enter your annual salary and income tax band

    Your tax band determines the combined Income Tax + NIC rate used for the tax-saving and tax-owed calculations.

  2. 2

    Enter your monthly Partnership Share contribution

    Automatically capped at the lower of £1,800/year or 10% of your salary, per HMRC rules.

  3. 3

    Select your employer's matching ratio and any Free Shares

    Matching ranges from none up to 2 shares for every 1 Partnership Share bought. Free Shares are capped at £3,600/year.

  4. 4

    Enter the current share price

    Used to convert contribution amounts into share counts and total value.

  5. 5

    Read your total shares, tax saved, and holding-period outcomes

    Results show total shares awarded this year, immediate tax saved on the pre-tax purchase, and the tax impact of removing shares before 3 years vs holding the full 5 years.

What Each Value Means

Partnership Shares (£ / shares)
Shares bought by the employee using salary deducted before Income Tax and National Insurance, up to £1,800/year or 10% of salary (whichever is lower) under 2025/26 HMRC limits.
Matching Shares (shares)
Free additional shares the employer awards based on how many Partnership Shares the employee buys, up to a 2:1 ratio (2 matching shares for every 1 partnership share).
Free Shares (£ / shares)
Shares given by the employer with no employee purchase required, up to £3,600/year, often awarded to all eligible employees or tied to performance.
5-Year Holding Relief (tax status)
Shares kept in the SIP trust for 5 years or more can be withdrawn completely free of Income Tax and National Insurance, regardless of how much their value has grown since award.

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Frequently Asked Questions

How does a UK Share Incentive Plan (SIP) work?
A SIP is an HMRC-approved employee share scheme with up to four components: Free Shares (employer gives up to £3,600/year tax-free), Partnership Shares (employee buys shares from pre-tax, pre-NIC salary, up to £1,800/year or 10% of salary, whichever is lower), Matching Shares (employer matches Partnership Shares up to 2 for every 1 bought), and Dividend Shares (dividends reinvested tax-free if held 3+ years). Shares are held in a trust and become fully tax-free if kept in the plan for 5 years.
How much tax do I save buying Partnership Shares?
Partnership Shares are deducted from your salary before Income Tax and National Insurance are calculated, so you get immediate relief at your marginal combined rate — roughly 28% for basic-rate taxpayers, 42% for higher-rate, and 47% for additional-rate (Income Tax plus employee NIC combined). A £1,800 partnership contribution at the basic rate saves about £504 compared to buying the same shares with post-tax income.
What happens if I leave my SIP shares in for less than 3 years?
If you remove shares from the plan within 3 years of the award/purchase date, you'll owe Income Tax and National Insurance on the shares' full market value at the date of removal — the least tax-efficient outcome, though you keep any partnership-share pre-tax purchase benefit already received. Leaving your employer is one common reason shares get removed early, since most schemes require you to withdraw shares if you leave the company.
What happens if I hold SIP shares between 3 and 5 years?
Between 3 and 5 years, Income Tax and National Insurance apply to whichever is lower: the shares' value when they were awarded, or their value when withdrawn. This gives partial protection — if the share price has risen since the award, you're only taxed on the original (lower) award value rather than the higher current value.
What happens if I hold SIP shares for 5 years or more?
Shares held in the SIP trust for the full 5 years can be removed completely free of Income Tax and National Insurance, regardless of how much the share price has grown. This is the core tax advantage the scheme is designed to reward — the longer you hold, the better the tax outcome, up to the 5-year full-relief point.

References & Sources

  1. [1]
    GOV.UK — Tax and Employee Share Schemes: Share Incentive Plans (opens in new tab)

    Supports: Evidence used for sip terms glossary: partnership, matching, dividend shares & more, including related formulas, definitions, or reference values.

    Verified

  2. [2]
    GOV.UK — Share Incentive Plans: A Guide for Employees (opens in new tab)

    Supports: Evidence used for sip terms glossary: partnership, matching, dividend shares & more, including related formulas, definitions, or reference values.

    Verified