Is SIP taken before tax and National Insurance?
Partnership shares bought through a tax-advantaged Share Incentive Plan are normally paid for from salary before Income Tax and National Insurance. The annual limit is the lower of £1,800 or 10% of your income for the tax year.
A £150 monthly example
A £150 SIP contribution does not necessarily reduce bank pay by £150. At a 20% Income Tax rate and 8% employee NI rate, the immediate cash cost can be about £108 before any student-loan effect. A higher-rate taxpayer can have a lower immediate cash cost. Your actual result depends on which tax bands the contribution crosses.
Matching shares
An employer can award up to two matching shares for each partnership share. Matching shares add investment value but do not add spendable cash. Share-price movements and withdrawal rules still matter, and full Income Tax and NI advantages normally require the shares to remain in the plan for five years.