The Share Incentive Plan (SIP) is a HM Revenue & Customs approved plan that includes Freeshares, Sharepurchase and Sharematch. It is open only to employees based in the UK who are paying UK income tax and are employed by a UK participating company.
Taking part in the Share Incentive Plan does not prevent you from saving under a Sharesave plan. You can join both!
Freeshares are awarded annually to employees who are on a UK contact with a Participating Company and paying UK income tax.
The number of shares that may be awarded is calculated as a percentage of salary as at 30 June, capped at a maximum value of £3,000. The percentage varies each year and is dependent on Diageo’s total performance during the financial year.
To be eligible to receive a Freeshares award you must be employed by a participating company on 30 June with a minimum of 30 days continuous service and remain employed up to and including the award date, normally early September. The Freeshares award is based on the number of days worked in the relevant financial year.
Freeshares cannot be sold until they have been held for three years. If you sell shares between 3 and 5 years old there will be income tax and National Insurance to pay. After they have been held for five year’s they can be sold without deduction of income tax and National Insurance. Any increase in value of shares sold while they are held in the SIP Trust is free from Capital Gains Tax.
All shares awarded under Freeshares are included when dividends are paid by Diageo plc.
Sharepurchase is an easy way to buy shares in Diageo plc from your pre-tax salary. For every two shares you purchase the company will award you one share free (Sharematch).
You can currently contribute between £10 and £150 per month. Your deduction is taken directly from your pre-tax salary and subject to a maximum of 10% of your monthly salary. Therefore, if you are a basic rate taxpayer every £1 you contribute only costs you approximately 80 pence. If you are a higher rate taxpayer, every £1 you contribute only costs you approximately 60 pence (or 55 pence, if you are an additional rate taxpayer).
The shares are purchased on the tenth day of every month or the next business day after. The shares are purchased in the stock market at the price at the time of dealing. The purchase price is announced shortly after the purchase and you can expect to receive a notification on your Shareworks portal account. There is no commission charged on the shares that are bought.
The plan is flexible and you can stop paying monthly contributions at any time and even vary your monthly contribution any time you want. Changes can be made on your Shareworks portal account.
Sharematch is linked to Sharepurchase. For every two Diageo shares you buy under Sharepurchase, you will be awarded one extra Diageo share free under Sharematch - Buy two, get one free!
If you sell your Sharepurchase shares before they are three years old, you will forfeit the corresponding Sharematch shares that were awarded. If you sell Sharepurchase or Sharematch shares aged between 3 and 5 years, there will be income tax and National Insurance to pay. It is only after they have been held for five years that they can be sold without deduction of income tax and National Insurance. Any increase in value of shares while they are held in the SIP Trust is free from Capital Gains Tax.
All shares bought under Sharepurchase and Sharematch are included when dividends are paid by Diageo plc.
Applications or changes to Sharepurchase must be made online by the 5th of the month for the instruction to commence from salary that month. If your instruction is input after the 5th your request will commence from the following month’s salary.
If you sell any taxable SIP shares the proceeds are processed through payroll and included with your normal salary so that tax and National Insurance can be withheld. If you input a taxable sale on or before the 8th of the month (or previous business day if this falls on a weekend) the proceeds will be paid in the same month’s salary. Sales after the 8th of the month will be included in the following month’s salary.
For more detailed information please see the Share Incentive Plan Factsheet which can be found in the Documents section of your Shareworks portal account.
You can log into your Shareworks portal account on the Shareworks Login page