£
Maximum £150/month (£1,800/year) allowed by HMRC
Enter £1–£150 per month.
%
Basic rate = 20%, Higher rate = 40%, Additional = 45%
Enter your income tax rate.
%
Employee NI rate (typically 8% for standard earners in 2024/25)
Enter your NI rate.
HMRC max is 2 free shares per 1 partnership share
%
Expected annual % growth in your company's share price
Enter expected growth rate.
yrs
5+ years = full tax-free benefit on withdrawal
Enter 1–30 years.
Total SIP Portfolio Value After Holding Period
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⚠️ Note: This calculator assumes a constant share growth rate and does not account for share price volatility, dividends, or changes to HMRC rules. Consult HMRC guidance or a financial adviser for your specific situation.
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Sources & Methodology
All calculations use current HMRC-approved SIP limits and UK tax rates. Updated March 2026.
HMRC — Share Incentive Plans (SIPs)
Official HMRC rules, limits, and tax treatment for SIP schemes.
HMRC — Income Tax Rates and Bands
Current UK income tax rates used in tax saving calculations.
Methodology: Monthly contributions are totalled annually. Tax savings = monthly contribution × (Income Tax % + NI %). Employer matching shares are calculated at the same value as partnership shares. Total portfolio value compounds annually at the specified growth rate over the holding period.
⏱ Last reviewed: March 2026
How Does a Share Incentive Plan Work?
A Share Incentive Plan (SIP) is a tax-efficient way to own shares in your employer's company. Money comes straight from your pre-tax salary, meaning you never pay Income Tax or National Insurance on it. The shares are then held in a trust on your behalf.
Types of SIP Shares
Partnership Shares → Free Matching Shares → Free Shares → Dividend Shares
Partnership Shares: You buy up to £1,800/year from pre-tax salary. Matching Shares: Your employer gives up to 2 free shares per Partnership Share. Free Shares: Employer gives up to £3,600/year free, no purchase needed. Dividend Shares: Dividends reinvested into shares, held 3 years tax-free.
Tax Advantages
The core benefit is using pre-tax money to buy shares. A basic rate taxpayer (20% IT + 8% NI) effectively gets a 28% discount on every share purchased. A higher rate taxpayer (40% + 2% NI) gets a 42% discount. This means £100 invested costs just £72 or £58 out of pocket.
The 5-Year Rule
Hold SIP shares for 5 years and all proceeds are completely free of Income Tax and National Insurance. This is in addition to the CGT Annual Exempt Amount. The 5-year holding period is why SIPs are such a powerful long-term savings vehicle.
💡 Pro Tip: Even if your company's shares don't grow at all, you're already ahead by the amount of tax saved on your contributions. The matching shares from your employer are effectively free money on top of that tax saving.
Frequently Asked Questions
You can invest up to £1,800 per year (£150/month) in Partnership Shares. Your employer can add up to 2 Matching Shares for every Partnership Share, and up to £3,600/year in additional Free Shares. Dividend shares have no cap — all dividends can be reinvested. These limits are set by HMRC and apply to the 2024/25 tax year.
Even if the share price falls, you may still be ahead due to the tax savings on contributions. For example, if a basic rate taxpayer invests £1,800/year and saves £504 in tax (28%), shares would need to fall 28% before you break even — before even accounting for employer matching. Many employees continue contributions through downturns and benefit from pound-cost averaging.
Yes. When you leave your SIP (voluntarily or on leaving employment), you can transfer your shares directly to a Stocks and Shares ISA within 90 days without counting towards your annual ISA allowance. This allows continued tax-free growth without selling the shares. This is one of the best features of SIPs for long-term investors.
Shares held in a SIP for 5+ years are completely free of Income Tax and NI on withdrawal. Capital Gains Tax may still apply on gains above the CGT annual exempt amount (£3,000 in 2024/25) after you withdraw and sell. However, you can use your CGT allowance to shelter gains, and transferring to an ISA avoids CGT entirely on future growth.
No, SIPs are optional for employers. They must register the plan with HMRC and meet specific conditions. SIPs must be offered to all eligible employees on similar terms — employers can't discriminate in favour of directors or higher earners. Check with your HR department or employee benefits portal to see if a SIP is available at your company.
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