A savings-related share scheme where you can buy shares with your savings for a fixed price. You can save up to £500 a month, for either three or five years. Monthly amount comes from your pay after tax.
At the end, you can either choose to (within 6 months after maturity)
- Take the cash (along with bonus) or
- Buy shares of the company at a price set at the start, known as the ‘option price’ and keep them or sell them.
Income Tax
- If you take out cash – Interest and any bonus at the end of the scheme is tax-free.
- You do not pay Income Tax or NI when you receive the shares.
- Pay tax on Dividend – if you hold on to the shares and your company chooses to pay a dividend to shareholders that year.
Capital gains
- If you sell shares – Subject to CGT with annual allowance of £3000.
- CG = Sale Price – Option price
- No CGT
- If transferred to ISA within 90days of taking them out. Your ISA provider must agree to the transfer.
- Put into Pensions – Immediately or within 90 days
- Gift shares to your spouse or civil partner. Gift is free from CGT and they take the base cost of the transferring spouse
- Spread sales over multiple tax years.
If left the company before scheme ends
You can’t buy the shares, but you’ll get all your savings back in cash.
Exception – Saving for more than 3 years, can buy shares within six months of leaving.
Sources:
Tax and Employee Share Schemes: Save As You Earn (SAYE) – GOV.UK
Sharesave schemes: Are they worth it? – MoneySavingExpert
