Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Earnings definition

What does Earnings mean? In corporate and finance practice, earnings means the profit attributable to ordinary shareholders for a reporting period. It is the company’s profit after tax, after finance costs (including interest paid to bondholders) and after any preference dividends. Earnings are commonly shown on a per‑share basis as earnings per share (EPS): profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the period. Example: £2 million earnings and 10 million shares gives EPS of 20p. Earnings is a descriptive accounting and market term, not a statutory one. For listed companies in the...

UK tax-advantaged Share Incentive Plans: Eligibility, 'Same Terms' and Participation Rules under ITEPA 2003

Published by a LexisNexis Share Incentives expert

Practice notes

Terminology

Under the SIP code—the legislation that governs the terms and requirements of Share Incentive Plans (SIPs) and sets out the available tax reliefs—the expression ‘award of shares’ describes shares that are either allocated to employees or acquired on their behalf on a particular occasion. Accordingly, when multiple employees receive shares at the same time pursuant to the same invitation, each individual is regarded as having taken part in the same award of shares. As dividend shares are not, in strict terms, ‘awarded’, they are excluded from the meaning of an ‘award of shares’ in paragraph 5, Part 1 of Schedule 2 to the Income Tax (earnings and Pensions) Act 2003 (ITEPA 2003), and therefore the eligibility requirements do not extend to dividend shares.

All-employee nature of the SIP

It is a fundamental principle of a SIP that it is operated on an all-employee basis. This all-employee requirement is fundamental to how a SIP must run...

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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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