Building on success. Guide to the HSBC Holdings UK Share Incentive Plan

Transcription

1 Building on success Guide to the HSBC Holdings UK Share Incentive Plan

2 2 To help you through.

3 Glossary of terms Dividend shares Additional shares bought with dividends on shares held within the Plan. Holding Period The period of 3 or 5 years from the Purchase Date of shares. Initial Market Value The amount you pay for your Partnership Shares or the market value of your Dividend Shares on their Purchase Date, as appropriate. Monthly Earnings In respect of a given month, the amount of earnings liable to deduction of tax under PAYE paid to you in that period, not including any expenses or benefits-in-kind. NIC National Insurance Contributions. Partnership Shares Shares you buy monthly through the Plan that are held by the Trustee on your behalf. Purchase Date The date each month when the Trustee purchases your Partnership Shares and, when applicable, Dividend Shares. Restricted Employees As defined in the Code for Dealing in HSBC Group Securities. Share Statement A statement sent to you by the Trustee showing the number of shares acquired on your behalf and any carried-forward cash. The Plan The HSBC Holdings UK Share Incentive Plan. Trustee The Trustee of the Plan, currently Computershare Trustees Limited, who purchase shares on the London Stock Exchange and hold those shares in the Plan on your behalf. Plan Administrator The administration of the plan currently, Computershare Plan Managers, The Pavilions, Bridgwater Road, Bristol, BS99 6AP. Saving for a brighter tomorrow. 3

4 4 Take it easy, sit back and relax.

5 The basics How it works You may invest between 10 and 150 each month, but never more than 10% of your monthly earnings. Your contributions are used by the Trustee to buy Partnership Shares and hold them within the Plan. Any dividends paid on shares within the Plan will be used to acquire additional HSBC Holdings shares (Dividend Shares). Am I eligible? Employees who are subject to UK income tax and paid in the UK become eligible to participate in the Plan after 6 months continuous employment with the HSBC Group. Why join? Contributions are taken from your monthly earnings before deductions of income tax and NIC (see example). Shares are not subject to income tax or NIC if Partnership Shares are held in Trust for 5 years or Dividend Shares for 3 years. You will benefit from any growth in value of the shares, but also risk any fall in value. No commission is charged when your shares are purchased. Any increase in the value of your shares while in the Plan will be free from Capital Gains Tax. How to join This Plan is entirely voluntary and you can join at any time. Join by the 15th of the month and your contributions will start the following month (subject to eligibility). Join the Plan by following the enclosed application instructions. Enrol online at or by calling the Interactive Voice Response (IVR) automated phone number. In either case you will require your Personal Identification Number (PIN), which should follow under separate cover within a few days. If you do not have your PIN, please contact the Plan Administrator. Example For every 1 worth of shares bought: Basic rate taxpayers: It will only cost 68p (for most employees). 40% taxpayers: It will only cost 58p. 45% taxpayers: It will only cost 53p. 5

6 Saving for a rainy day. Your questions answered... 6 How much can I contribute to the Plan? You may contribute up to 10% of your monthly pretax earnings, subject to a monthly maximum of 150 ( 1,800 per annum). The minimum amount that you may invest is 10 per month. How long must the shares be held in the Plan? You can remove your shares from the Plan at any time. However, you will only be entitled to the full beneficial tax treatment if Partnership Shares remain in the Plan for at least 5 years or Dividend Shares for a minimum of 3 years from their Purchase Date. How do I sell my shares? You can sell your shares at any time from within the Plan by contacting the Trustee (a fee of 0.2% of the sale proceeds, subject to a charge of 15.00, will be charged per sale instruction). You may also choose to remove your shares from the Plan and sell them at a later date. Please refer to the Taxation section of this brochure regarding the tax treatment if the shares are withdrawn from the Plan before they become tax free. Can I cancel or change my contributions? You may cancel or change the level of your contributions at any time by contacting the Plan Administrator. Instructions received by the 15th of each month will be effective from the following month s salary payment. How can I check to see how many shares I have in the Plan? You can review the number of shares held in your account and your cash balance by accessing your Computershare account securely from your HSBC workstation. Please go to HSBC NOW > Tools > Human Resources > HRDirect/My HR Desktop > HR Tools > Benefits > Computershare. You can also log into your account at A yearly statement will also be posted online. If you do not have a User ID and PIN, please contact the Plan Administrator, so that you are able to access your records online. Can I rejoin the Plan after I ve cancelled my contributions? You may resume contributions at any time by contacting the Plan Administrator. Instructions received by the 15th of each month will start contributions from the following month s salary payment. If you stop making contributions, you will not be able to make up any missed contributions when you restart the Plan.

7 What happens to my contributions if I am transferred overseas with the HSBC group? If you are no longer paid in the UK and cease to be liable for UK income tax, no further contributions can be made. Shares already acquired can remain in the Plan. If you return to the UK your contributions will restart unless you advise HSBC Payroll otherwise. What is the impact on my terms and conditions of employment? Participation in the Plan has no impact on payments made under the terms of your contract of employment. For example, pensions, bonuses and overtime will continue to be linked to your gross basic salary and will be unaffected by participation in the Plan. Is the Plan subject to the Code for Dealing in HSBC Group Securities? Employees who are Restricted Employees must obtain permission to deal in accordance with the Code before selling Partnership and/or Dividend Shares. What happens to the leftover cash balance from the monthly contributions? A residual cash balance will be carried forward on a non interest earning basis to the next monthly contribution. What happens if I leave the HSBC group? The legislation does not permit Partnership or Dividend Shares to remain in the Plan if you leave the HSBC Group. The tax treatment of the shares depends on the reason that you leave the Group. Please refer to the Leaving the Company section of this brochure. How do I contact the Plan administrator? Contact information can be found at the end of this brochure. How much can I contribute to the Plan? 7

8 Taxation Taxation The following notes are for general guidance only. You should note that tax legislation may change and current legislation will take precedence. When purchased When the shares are purchased. 0 3 years If you take shares from the Plan within 3 years from the date they were purchased. 3 5 years If you take shares from the Plan after 3 years but before 5 years have elapsed from the date they were purchased. 5 years + When you take shares from the Plan after 5 years from the date they were purchased. Your personal circumstances may affect your tax position and if you are in any doubt, you should consult your independent financial adviser. Capital Gains Tax There is no Capital Gains Tax (CGT) liability whilst the shares remain in the Plan. However, CGT may be payable on any increase in the value of shares between the date they are withdrawn from the Plan and the date they are sold. For your records You should keep all your statements for Capital Gains Tax (CGT) purposes and for income tax purposes. These include: Information about how much was paid for the shares, and the relevant dates following release from the Plan; The market value of the shares on the relevant dates; and Transaction details about the shares. Partnership shares No income tax or NIC to pay. See example below. Dividend shares No income tax to pay on dividends used to buy Dividend Shares. Income tax and NIC are payable on the market value of the shares when they are taken out of the Plan. Dividends used to buy shares will be taxed as a dividend in the year when you take the shares out of the Plan. Typical tax saving examples Deducted from salary before tax Savings in income tax Savings in NIC Deducted from salary before tax Savings in income tax Savings in NIC Income tax and NIC are payable on the lower of: The amount of contributions used to acquire the shares; or The market value of the shares when they are taken out of the Plan. No income tax or NIC to pay No income tax or NIC to pay. No income tax or NIC to pay. Basic rate taxpayer 40% taxpayer 45% taxpayer Deducted from salary before tax Savings in income tax Savings in NIC Effective cost of shares 68 Effective cost of shares 58 Effective cost of shares 53 8

9 Leaving the company Your shares must be withdrawn from the plan if you leave the HSBC Group. The Plan Administrator will write to you to obtain your instructions. If you take maternity or any other unpaid leave and receive no pay, then contributions cannot be made during the period of leave but shares acquired can remain in the Plan. Unless you cancel the contributions, they will recommence automatically when you return to work. Reason for leaving Resignation Dismissal Redundancy Retirement Injury/disability The transfer of your employing business to outside the Group The sale of the Company you work for outside the Group All your shares must be withdrawn from the Plan. Tax treatment will be as on the previous chart. Your Partnership and Dividend Shares will be transferred to you without any liability to income tax or NIC, regardless of the length of time that the shares have been held in the Plan. What happens if I leave the HSBC Group? Death Partnership and Dividend Shares held on your behalf under the Plan will be passed to your estate. In these circumstances, there is no liability to income tax or NIC. 9

10 Additional information Financial investment Shares are a risk investment, the value of which may fall as well as rise. You may not receive back the full sum you invested. Past performance is not necessarily a guide to future performance. You may wish to seek advice from an authorised independent financial adviser before pursuing any investments. Additional information Contributions from your pay to purchase Partnership Shares may affect your entitlement to, or the level of, some contributory social security benefits, statutory maternity pay and statutory sick pay. They may also have a similar effect in respect to some contributory social security benefits paid to your spouse. Additional information can be found on the Revenue s website in IR177 Share Incentive Plans and your entitlement to benefits. This can be found at Please Note The purpose of this guide is to describe the Plan so you can decide whether to participate. It is a general guide only. It is not a copy of the Plan Rules. Where there are any conflicts between this guide, the Rules of the Plan and the legislation, the Rules and legislation will prevail. Under the Financial Services and Markets Act 2000, neither the Company nor its Trustee can offer financial advice. 10

11 Where can I find additional information? If we ve not answered your question please contact the Plan Administrator, Computershare Investor Services. Computershare will also assist you if you would like to cancel, amend or rejoin the Plan. Write to Computershare Investor Services PLC Plan Managers The Pavilions Bridgwater Road Bristol BS99 6AP or telephone or aesgeneral@computershare.co.uk 11

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