SIP Calculator Examples: Different Salaries and Holding Periods

July 16, 2026

Three worked examples below, using the same 2025/26 HMRC rules the Share Incentive Plan calculator applies. For term definitions, see the SIP terms glossary.

Example 1 — Lower Earner Hitting the 10% Cap

£15,000 salary, basic-rate taxpayer, 1:1 matching, no Free Shares, £5 share price, removed under 3 years

The 10% of salary limit (£1,500) is lower than the standard £1,800 cap, so it applies instead:

Partnership Shares = £1,500 ÷ £5 = 300 shares
Matching Shares (1:1) = 300 shares
Total = 600 shares (£3,000)

Immediate tax saved on purchase (28% combined) = £1,500 × 0.28 = £420
Tax owed if removed under 3 years (28%) = £3,000 × 0.28 = £840

Even though this saver contributed less than the £1,800 headline figure, the 10%-of-salary rule — not the flat cap — determined their actual limit.

Additional-rate taxpayer, £1,800 Partnership contribution, no matching, no Free Shares, £8 share price at award, held 4 years, price grown to £12 at removal

Partnership Shares = £1,800 ÷ £8 = 225 shares
Value at award = 225 × £8 = £1,800
Value at removal = 225 × £12 = £2,700

Held 3-5 years → tax on the LOWER of the two values = £1,800
Tax owed (47% combined) = £1,800 × 0.47 = £846

Without the 3-5 year partial protection, tax on the full £2,700 removal value would have been £1,269 (£2,700 × 47%) — the holding-period rule saves this saver £423 simply by taxing the lower, original award value instead of the grown current value.

Example 3 — Held 5+ Years, Full Tax Relief

Same 225 shares as Example 2, now held 5+ years, still worth £12/share

Value at removal = 225 × £12 = £2,700
Tax owed (5+ years) = £0

Holding the identical shares just one year longer than Example 2 — past the 5-year mark instead of stopping at 4 — turns a £846 tax bill into £0, regardless of how much the share price grew in the meantime. This is the core incentive the 5-year rule is designed to reward.

What These Examples Show

The 10% salary cap can bind before the flat £1,800 limit for lower earners (Example 1), the 3-5 year band offers real but partial protection against share-price growth (Example 2), and crossing the 5-year threshold eliminates the tax bill entirely regardless of growth (Example 3). See common SIP calculator mistakes for the ways these thresholds get misapplied in practice.

Calculate Your Own

Enter your actual salary, contribution, matching ratio, share price, and expected holding period into the Share Incentive Plan calculator — and see what happens to SIP shares when you leave your job if a departure before 5 years is a realistic possibility for you.