The SAYE scheme is a savings related scheme where employees of participating companies with share option schemes can save to buy shares at a discount. SAYEs are approved by HMRC and they allow employees to make contributions and buy shares at a future date using the current share price (discounted by up to 20%). Employees can contribute up to £500 each month through the SAYE scheme.
The contributions are made from an employee’s taxed income, and they are locked into a 3 or 5 year contract. At maturity, an employee can choose to exercise the option to buy shares or take the proceeds and a bonus in cash. The interest and any bonus at the end of the scheme is tax-free and there is no Income Tax or National Insurance due on the difference between what you pay for the shares and what they are worth.
Savers can also achieve Capital Gains Tax (CGT) savings if the shares are placed in an ISA or pension when the scheme ends.
Rates have changed following the Bank of England interest cut earlier this month. The 5 year bonus rate is currently 3% (was 3.2% prior to 16 August 2024) and the 3 year bonus rate is 1.1% (unchanged). The early leaver rate is currently set at 1.33% (1.42% prior to 16 August 2024).
Our payroll department can help, get in touch with us to learn more.