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A Save As You Earn Scheme (SAYE) (sometimes called a Sharesave Scheme) is a tax-advantaged, employee share scheme. It is one of the many types of share option schemes employers can use to attract and retain talent in today’s competitive market.

What is a Sharesave Scheme?

A Sharesave Scheme allows employees to use their savings to buy company shares at a fixed price. Up to £500 per month can be set aside as savings. You, as the employer, set a savings period (for example three years) and after this time elapses, the employee can use the amount they have saved to purchase shares.

How do I set the share price in a SAYE option scheme?

The exercise price can be a discount of up to 20% of the market value of the shares at the time the employee joins the share scheme. Although you can set a qualifying period of service (which cannot be more than five years) the scheme must be open to all employees. 

The option grant is conditional on the employee taking out a linked savings arrangement with a bank or building society. This allows the employee the chance to save up money for the option to buy the shares.

Are Sharesave Schemes tax free?

The short answer is no, not exactly. But the tax benefits of Sharesave Scheme include:

  • The interest and any bonuses attached to the savings are tax-free
  • Income Tax or National Insurance is not payable on the difference between what the employee pays for the shares and their market value
  • Capital gains tax is not payable if the shares are transferred into an ISA within 90 days of the scheme closing or directly into a pension when the scheme ends

Get legal assistance from LawBite

Setting up a Sharesave Scheme provides a tax-beneficial share option plan that will encourage employee acquisition and retention. Our friendly solicitors can provide the legal advice you need to successfully set up your own SAYE scheme.

LawBite has helped thousands of business owners and SMEs achieve their commercial ambitions and regulatory compliance. To find out how we can support in setting up a Sharesave Scheme, from drafting the rules to reviewing your agreement - book a free 15 minute consultation or call us on 020 3808 8314.


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In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

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