Employee Save As You Earn SAYE Schemes

Published / Last Updated on 05/06/2022

This is a savings-related share scheme where you can buy shares with your savings for a fixed price at the end of the savings term.

How SAYE works?

Your employer offers a Save As You Earn share scheme.

  • You can save up to £500pm into a nominated savings account.  Savings are deducted from your pay.
  • SAYE scheme must either be a 3-year or 5-year term.
  • Interest and any savings bonus added to your savings account during or at the end of the term are tax free.
  • At the end of either the 3- or 5-year term, your savings account buys the company shares either at a discount price or for many schemes at the price the company shares were at 3 or 5 years ago.
  • The simple idea is that you buy shares tax free over a period of years at a discount and hopefully the share price has increased over the years meaning you get a good return.

Income Tax and National Insurance

  • You do not pay income tax or national insurance on the interest, or any savings bonuses added to your savings account.
  • You do not pay income tax or national insurance on discounted purchase price of the shares i.e., no taxes on the difference in share price you buy at and the actual share price on the day.

Capital Gains Tax

Capital gains tax may be payable If/when you sell or give away the shares the value has increased since acquisition subject your normal annual capital gains allowance remaining, if any.

You do not pay capital gains tax if you transfer the shares:

  • To an Individual Savings Account (ISA) within 90 days of the scheme ending (i.e., when you bought the shares).
  • To a pension scheme, directly from the SAYE scheme when it ends.  If you delay for up to 90 days before transferring to a pension scheme, you may be subject to capital gains tax if the price increases in the window between the day you bought them and transfer date.

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