Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Capital gains tax definition

What does Capital gains tax mean? Capital gains tax (CGT) is the tax on the profit (chargeable gain) realised when a chargeable asset is disposed of, for example by sale, gift or exchange of shares, land or a business. The concept and computation are statutory: in the UK, principally the Taxation of Chargeable Gains Act 1992; in Ireland, the Taxes Consolidation Act 1997. CGT primarily applies to individuals and trusts. In the UK, companies do not pay CGT; their gains are within corporation tax. In Ireland, companies are generally taxed on chargeable gains under corporation tax, typically at the CGT rate. Key features include an annual exempt...

UK Share Incentive Plans (SIPs): CGT treatment for trustees and participants, and corporation tax reliefs/deductions for employers, including ISA/pension transfers, disposals into SIP, rights issues and share identification

Published by a LexisNexis Share Incentives expert

Practice notes

SIP

As the sole tax‑favoured share plan, a SIP allows participants to potentially realise unlimited growth in their shares without incurring income tax, National Insurance contributions (NICs) or capital gains tax (CGT). For all other tax‑advantaged arrangements—enterprise management incentives (EMI), save as you earn (SAYE) and company share option plans (CSOPs)—CGT can arise on the increase in share value from the date the options were granted. By contrast, where an individual keeps their SIP shares within the plan until disposal, no CGT is payable on that disposal. Do note that if a disqualifying event occurs in respect of a SIP, the preferential tax treatment for SIPs will not apply to any awards made after that point. For more information, see Practice Note: SIPs—qualifying companies and type of shares—Restrictions on shares and disqualifying events for SIPs. The tax outcomes described in this Practice Note apply to individuals who are at all times resident in the UK for CGT purposes. For the income tax and NICs position for SIP participants, see Practice Note: Share...

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Jonathan Fletcher Rogers

Addleshaw Goddard

Jonathan is the head of Addleshaw Goddard's Employee Incentives and Remuneration practice, and advises UK and multinational clients on the design and implementation of share and cash-based employee incentive plans. He also advises quoted companies on corporate governance and disclosure issues in relation to remuneration. Jonathan is a regular speaker at conferences on executive remuneration and share plans more generally and has been recognised as a leading individual in employee incentives in Chambers and Partners....

Web page updated on 22/05/2026

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