The short version: Save As You Earn (SAYE) is a scheme that lets you save money each month and use it to buy shares in your employer at a fixed price. The savings earn tax free interest.
How does it work?
You agree to save a regular amount (up to a limit) each month for three or five years. At the end, you get a tax free bonus on your savings. You can then either take the cash or use it to buy company shares at the price fixed when you started.
What’s the tax benefit?
The bonus and interest on your savings are tax free. If the share price has gone up since you started, you’re buying at a discount. You don’t pay Income Tax or NI on that discount either.
What about when you sell?
You might pay Capital Gains Tax if you sell the shares for more than they were worth when you bought them. Using an ISA to hold them can shelter gains from CGT.
Got SAYE shares and wondering about the tax? Let us help you plan the best exit.
