Share Incentive Plan

In order to participate in the SIP, you must be employed by a participating company and subject to UK income tax deducted through PAYE. If you are employed on a fixed term or temporary contract with a participating company and meet these criteria, you are eligible to join. However, you should note that if your employment contract expires, this will be treated under the SIP in the same way as a resignation.

You should remember the price of shares may go down as well as up. If you are a lower wage earner and the deduction of your contribution, prior to income tax and NICs, takes you below the lower earnings limit, you may find that you will not pay NICs. You may then find that your statutory benefits will be reduced if you are out of work for long term sick or parental leave.

You may stop, start or amend the level of your contributions at any time by following the instructions on the ESP Portal. Equiniti will pass your instruction to Payroll and it will be processed in the next available monthly pay cycle. If you decide to stop, your shares will remain in the SIP, although no new shares will be purchased on your behalf. Please note: Any contributions missed, either due to stopping and restarting payments, or because you received insufficient pay in any particular period to meet the payment, may not be made up at a later date.

If you stop being employed by National Grid for any reason, your Partnership Share Agreement will end and your Partnership and Dividend Shares must be transferred out of the SIP. You will receive further details after your date of leaving confirming actions you need to take and regarding any income tax or NICs due.

If you stop being employed by National Grid as a result of injury, disability, redundancy, or retirement, by agreement with National Grid or because your employing company or the business unit for which you work is sold out of National Grid, you will not be subject to income tax nor NICs on the transfer or sale of your Partnership Shares out of the plan. You will receive further details after your date of leaving confirming actions you need to take to remove your shares from the SIP.

Any shares or cash held by the Trustee on your behalf under the SIP will be transferred free of all taxes to your legal personal representatives in the event of your death.

If you resign from National Grid, or your temporary contract expires, or you are dismissed before your Partnership Shares have been held in the SIP for five years then you will be subject to income tax and NICs based on your leaving date, not on the date your shares are subsequently sold or transferred from the SIP.

If your employment is transferred to another United Kingdom based company within National Grid which is not designated as a participating company, the Trustee will still be able to use any amounts which it already holds on your behalf to purchase Partnership Shares. However, no further contributions can be made once you are no longer employed by a participating company. This will not affect any shares which have been purchased which will remain in the SIP in the normal way.

Whilst you are still receiving pay, your contributions will, unless you instruct otherwise, continue. During that period, you may choose to stop or amend your contributions. Once on unpaid leave for parental leave or long term sickness, contributions will have to stop as a result of the statutory provisions. This is because you have no gross pay from which contributions may be made. However, you can restart contributions on your return, as set out above. Again, you are not permitted to make up any missed contributions when you restart contributions.

Dividends are usually paid twice a year, however, the frequency and level of future dividends cannot be guaranteed. When you apply you decide how you wish to receive your dividends, either as cash or as additional shares that will be held in the SIP (‘Dividend Shares’). Providing the Dividend Shares remain in the SIP for three years (whilst you remain employed you cannot sell or transfer Dividend Shares less than three years old), you will not have to pay income tax on receipt of the shares. For cash dividends income tax is payable on any amount above the £2,000* annual dividend allowance. If you are subject to the National Grid Share Dealing Policy, you will need to seek prior clearance from the Company Secretariat team to either participate in the Dividend Reinvestment element of the Plan or stop your participation and receive dividends in cash.

• Please note, the annual dividend allowance is reducing to £1,000 from 6 April 2023, and then £500 from 6 April 2024.

Gross pay, for the purpose of the SIP, is defined as base pay, overtime, bonuses and other payments and allowances subject to income tax under PAYE, but excluding expenses and benefits in kind. For part-time staff, the 10% gross pay limit on the amount you may contribute is based on actual gross part-time pay.