Share Incentive Plan (SIP) Calculator
Estimate what a UK Share Incentive Plan is worth to you: the income tax and National Insurance you save by buying partnership shares from gross pay, plus the value of any matching and free shares your employer adds.
A Share Incentive Plan, or SIP, is a UK tax-advantaged employee share scheme. It lets you buy shares in your employer straight from your gross salary — before income tax and National Insurance are taken — and lets your employer give you free shares and match the shares you buy. Keep the shares in the plan for five years and you pay no income tax or National Insurance on them, and there's no Capital Gains Tax on any growth while they stay in the plan.
The four types of SIP shares
A plan can offer any combination of four share types, each with its own annual limit set by HMRC.
| Share type | Annual limit (2025/26) | How it works |
|---|---|---|
| Partnership | £1,800 or 10% of salary, whichever is lower | You buy from pre-tax pay, saving income tax and NI |
| Matching | Up to 2 for every 1 partnership share | Free shares from your employer to match your purchase |
| Free | £3,600 | Given by your employer at no cost to you |
| Dividend | Reinvested dividends | Cash dividends reinvested into more plan shares |
How the tax saving works
Because partnership shares are bought from gross pay, the money never gets taxed as income when you buy — so your saving equals your marginal income tax rate plus your National Insurance rate, multiplied by the amount you contribute.
Net cost = Partnership contribution − Tax & NI saved
Matching value = Partnership contribution × Matching ratio
Total share value = Partnership + Matching + Free
Worked example
A basic-rate taxpayer on £35,000 puts £1,500 a year into partnership shares, with 2-for-1 matching:
| Tax & NI saved = 1,500 × (20% + 8%) | £420 |
| Net cost = 1,500 − 420 | £1,080 |
| Matching shares = 1,500 × 2 | £3,000 |
| Total shares received | £4,500 |
For an outlay of just £1,080 after tax relief, this employee receives £4,500 of shares in year one — before any free shares or future growth. Higher-rate taxpayers save even more, because their marginal relief is larger.
The five-year rule
The full tax advantage depends on keeping shares in the plan. Take partnership or matching shares out within three years and you pay income tax and NI on their value; between three and five years the charge is based on the lower of the amount you paid or the value on withdrawal. Hold for five years and there is no income tax or NI at all. Shares sold straight from the plan are also free of Capital Gains Tax, whatever the gain — a valuable feature if the share price has risen.