Save As You Earn changes
Changes have been announced in the bonus rates for the Save As You Earn (SAYE) Sharesave scheme that will maintain them in line with other interest rates.
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. SAYE’s are approved by HMRC who allow employees to make contributions and buy shares at a future date using the current share price (discounted by up to 20%). The contributions are made from an employee’s taxed income and they are locked into a 3, 5 or 7 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 bonuses are equivalent to fixed rate interest and are set by the Treasury. In normal circumstances, no income tax or National Insurance Contributions are incurred on the granting or exercising of options.
The new bonuses which are effective from 17 February 2009 are:
Contract Type |
Bonus Rate(Previous rates in brackets) |
Annual Equivalent Rate(Previous rates in brackets) |
3 year |
0.6 x monthly payments (1.5) |
1.08% (2.67%) |
5 year |
2.6 x monthly payments (4.8) |
1.67% (3.04%) |
7 year |
5.6 x monthly payments (9.3) |
1.98% (3.20%) |
The Early Leavers Rate is reducing from 2% to 0.5%.