Answers · UK 2025/26
What is a Company Share Purchase Plan (CSPP) and how is it taxed?
A Company Share Purchase Plan (also called Share Incentive Plan or SIP) lets employees buy employer shares tax-efficiently, with no income tax or NI if held in the plan for 5 years.
Full answer
A Share Incentive Plan (SIP, also called CSPP) is an approved employee share scheme. Employees can buy "partnership shares" from gross pay (up to £1,800/year or 10% of salary), and employers can give matching shares (up to 2 for every 1 partnership share) and free shares (up to £3,600/year). Shares held for 5 years are free of income tax and NI on withdrawal. Shares withdrawn before 5 years are subject to income tax/NI on the market value at withdrawal, or the lower of original value (for free/matching). CGT is based on market value at withdrawal date (not original grant date). Dividends within the plan can be reinvested as "dividend shares" -- up to £1,500/year free of income tax.
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.