Share Incentive Plan Calculator
Enter your salary, share price and contributions to estimate what your Share Incentive Plan is worth and what you would keep after tax. It applies the real HMRC rules: the £1,800 or 10% partnership cap, the £3,600 free share limit, 2:1 matching, and the tax charge that falls away after five years. Each year you contribute is tracked separately, because the shares you bought last year are taxed differently from the ones you bought five years ago.
For the UK, HMRC tax-advantaged Share Incentive Plan. Not an RSU grant, stock option or ESOP. An estimate, not tax advice.
Your estimate
Value at exit
£0.00
Tax on withdrawal
£0.00
You keep
£0.00
What you keep if you take the shares out at the end of…
| Year | Value | Tax | You keep | Gain on your cost |
|---|
Show every award and how it is taxed
| Award | Year | Age at exit | Value at exit | Taxable | Rule applied |
|---|
An estimate using 2026/27 rates, not tax advice and not a forecast of your share price. What you actually pay depends on your plan's rules, when and why you leave, your other income, and where in the UK you pay tax. Your employer's plan administrator holds the real numbers, and an accountant or adviser can tell you what they mean for you.
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How to use the Share Incentive Plan calculator
- Enter your salary and share price. Salary sets your National Insurance rate and the 10% contribution cap; the share price is what one share costs today.
- Add what goes into the plan each year: your partnership contribution, any free shares, and the matching ratio your employer offers.
- Set how long you stay. The tool assumes you contribute every year, then take the shares out at the end.
- Read the exit table. It shows what you keep at the end of each year, and the award table shows which tax rule applies to each year’s shares.
What a Share Incentive Plan is
A Share Incentive Plan (SIP) is a UK employee share scheme approved by HMRC. Your shares sit in a trust, and the tax advantages depend on how long they stay there. It is not an RSU grant, a stock option, an ESOP or an Indian Systematic Investment Plan, those are different products with different rules, and most calculators for this search model one of them by mistake.
| Share type | Who pays | Limit a tax year | Tax if held 5 years |
|---|---|---|---|
| Free shares | Your employer | £3,600 | None |
| Partnership shares | You, from gross pay | £1,800, or 10% of salary if lower | None |
| Matching shares | Your employer | Up to 2 per partnership share | None |
| Dividend shares | Reinvested dividends | Set by your plan | None after 3 years |
Partnership shares are the part you control. The money comes out of your gross pay, so you never pay Income Tax or National Insurance on it, that is the immediate benefit, before the share price does anything at all.
What partnership shares really cost you
Because the deduction is from gross pay, £1,800 of shares costs less than £1,800 of take-home pay:
| Your position | Relief | £1,800 of shares costs |
|---|---|---|
| Basic rate, under £50,270 | 20% + 8% NI | £1,296 |
| Higher rate, under £50,270 | 40% + 8% NI | £936 |
| Higher rate, over £50,270 | 40% + 2% NI | £1,044 |
| Under the personal allowance | None | £1,800 |
That third row catches people out. National Insurance drops from 8% to 2% above the upper earnings limit of £50,270, so a higher earner’s relief is smaller than a calculator applying a flat 8% will tell them.
The tax when shares leave the plan
This is the part that decides whether a SIP was worth it, and it depends entirely on how long each share has been in the trust.
| Time in the plan | What is taxed | Tax charged |
|---|---|---|
| Under 3 years | Market value on the day you withdraw | Income Tax + NI |
| 3 to 5 years | The lower of value at award and value at withdrawal | Income Tax + NI |
| 5 years or more | Nothing | None |
| Good leaver, any time | Nothing | None |
A good leaver means leaving through redundancy, retirement, injury, disability, a TUPE transfer, or the company being sold. The “lower of” rule between 3 and 5 years works in your favour when the share price has fallen: you are taxed on the smaller number.
Why “five years” doesn’t mean what people think
The clock runs per award, not per person. If you contribute every year and leave after five years, only the first year’s shares have actually been in the plan for five years. The shares you bought last month are weeks old and fully taxable.
That is why this calculator tracks every year separately and shows the rule applied to each. Take a plan of £1,800 a year with 1:1 matching, £5 shares growing 5% a year, on the basic rate:
| Bought in | Age at exit | Rule | Taxable |
|---|---|---|---|
| Year 1 | 5 years | Exempt | £0 |
| Year 2 | 4 years | Lower of award and exit value | £3,600 |
| Year 3 | 3 years | Lower of award and exit value | £3,600 |
| Year 4 | 2 years | Full value at withdrawal | £3,969 |
| Year 5 | 1 year | Full value at withdrawal | £3,780 |
Total value £20,886.89, taxable £14,949.00, tax at 28% = £4,185.72, so you keep £16,701.17 having given up £6,480 of take-home pay.
The tax bill stops growing
Here is something the exit table makes obvious. With level contributions and steady growth, a share that is two years old at exit is always worth your annual contribution times the growth rate squared, whichever calendar year you bought it in. So the taxable pile is always the last four years of awards, and it stops growing.
In the example above, staying a sixth year adds another £4,800-odd of shares and no extra tax at all: the tax stays at £4,185.72 while the value rises. Every year past the fifth adds a fully exempt tranche. This is the single strongest argument for staying in the plan, and no other calculator shows it.
Dividend shares
If your plan reinvests dividends, those shares run their own three-year clock. Hold them three years and the dividend escapes Income Tax entirely. Take them out sooner and you pay Income Tax on the cash dividend that was reinvested, but not National Insurance, because a dividend is not earnings.
Dividend tax rates rose on 6 April 2026. They are now 10.75% at the basic rate, 35.75% at the higher rate and 39.35% at the additional rate. Calculators still showing 8.75% and 33.75% are a tax year out of date. The £500 dividend allowance is not applied here, because it is shared across all your dividend income and assuming it would understate your bill.
Capital Gains Tax
There is no CGT while shares sit in the plan, and none on the growth up to the day they leave. Sell on the day they come out and there is no gain to tax, because your base cost is that day’s market value. Keep them and sell later, and CGT applies only to growth after the withdrawal date. Moving them straight into an ISA within 90 days, or into a pension when the plan ends, shelters later growth too.
What this calculator does not do
- It is not advice. Your plan’s own rules can be stricter than the statutory ones, and they decide forfeiture, accumulation periods and whether you can stop contributing.
- It assumes one steady contribution a year and a steady growth rate. Real plans deduct monthly and real share prices do not move in straight lines.
- It does not model your whole tax position. The rate you pick is applied to the full withdrawal; a large withdrawal could push part of it into a higher band.
- Scotland has its own Income Tax bands, offered in the dropdown. National Insurance is the same across the UK.
- It does not know your share price. Growth is your assumption, not a forecast.
Sources
- GOV.UK: Tax and Employee Share Schemes — Share Incentive Plans. The £3,600, £1,800 and 10% limits, 2:1 matching, and the five-year rule.
- GOV.UK: National Insurance rates and categories. 8% to the upper earnings limit, 2% above, for 6 April 2026 to 5 April 2027.
- GOV.UK: Income Tax rates and Personal Allowances.
- GOV.UK: Tax on dividends. The 2026/27 rates of 10.75%, 35.75% and 39.35%.
- Pinsent Masons: Share Incentive Plans. Confirms matching shares are limited by the 2:1 ratio and not by a separate cash cap.
Rules and rates checked 22 September 2026 against GOV.UK, for the 2026/27 tax year. FreeToolBank is not a tax adviser and this page is not tax advice.
Frequently asked questions
What is a Share Incentive Plan?
A SIP is a UK share scheme approved by HMRC that lets you hold shares in your employer through a trust. There are four kinds: free shares your employer gives you, partnership shares you buy from your gross pay, matching shares your employer adds on top of those, and dividend shares bought by reinvesting dividends. Keep them in the plan for five years and they come out with no Income Tax and no National Insurance.
How much can I put into a Share Incentive Plan?
Partnership shares are capped at £1,800 a tax year or 10% of your salary, whichever is lower, so anyone earning under £18,000 hits the 10% limit first. Free shares are capped at £3,600 a year. Matching shares are limited to 2 for each partnership share you buy, with no separate cash cap. The calculator applies all three and tells you when the 10% rule bites.
What tax do I pay if I take SIP shares out before five years?
Under 3 years, Income Tax and National Insurance are charged on the market value on the day you take them out. Between 3 and 5 years, the charge falls on the lower of what the shares were worth when awarded and what they are worth when you withdraw, so a falling share price reduces the bill. At 5 years there is no charge at all. Leave as a good leaver, through redundancy, retirement, injury, disability, TUPE or the company being sold, and the shares come out free whenever that happens.
What does £1,800 of partnership shares actually cost me?
A basic-rate taxpayer pays £1,296, because the money leaves your gross pay and saves 20% Income Tax plus 8% National Insurance. A higher-rate taxpayer earning under the £50,270 upper earnings limit pays £936, at 40% plus 8%. Above that limit, National Insurance drops to 2%, so the same £1,800 costs £1,044. Several calculators apply 8% at every salary and overstate the saving for higher earners.
Do I pay Capital Gains Tax on SIP shares?
Not while the shares sit in the plan, and not on growth up to the day they leave it. If you sell on the day they come out, there is no gain to tax because your base cost is that day's value. If you keep them and sell later, Capital Gains Tax applies only to the growth after the withdrawal date. Moving them into an ISA within 90 days, or into a pension when the plan ends, keeps later growth sheltered.
Is a Share Incentive Plan the same as RSUs, an ESPP or a Systematic Investment Plan?
No, and the difference matters because most online "share incentive plan calculators" model something else. A SIP is UK-specific, has statutory limits and a five-year clock. RSUs vest and are taxed as earnings on vesting. An ESPP buys shares at a discount, usually in the US. A Systematic Investment Plan is an Indian mutual fund arrangement and has nothing to do with employee shares. This calculator models the UK SIP only.
Last updated: September 22, 2026