PT40 Save as You Earn Share Option Schemes

Question 1

What is a Save As You Earn (SAYE) Share Option Scheme?

Answer 1

A Save As You Earn (SAYE) Share Option Scheme is simply an arrangement whereby employees save a fixed amount each month into an SAYE account.

This may be topped up by a tax-free bonus from the bank and the funds can then be used to exercise options over employer company shares.

Question 2

SAYE

The employer company must usually be _____

Answer 2

quoted.

Question 3

SAYE

Which employees have to be included?

Answer 3

All employees must be eligible to participate, although those with less than five years’ service can be excluded.

Question 4

SAYE

The options granted can be at a discount of ….

Answer 4

up to 20% of the value of the shares at the date of the grant.

Question 5

The SAYE account must be for…..

The maximum contribution is ……

The minimum contribution is ……

Answer 5

three or five years and the length of the contract and
monthly savings are fixed at the start.

The maximum contribution is £500 a month

minimum is £5 a month, although the employer can impose a minimum monthly contribution of not more than £10 per month.

Question 6

SAYE

Any bonuses awarded are ….

Answer 6

a multiple of monthly contributions and are tax free. The bonus rates do not need to be learned for exams. The bonus rate on all contracts has been nil since 2015.

Question 7

SAYE

Income tax?

Answer 7

There are no income tax or NICs implications at either grant or exercise of the share options.

Question 8

SAYE

CGT?

Answer 8

capital gain on sale equal to the difference between cost and
sale proceeds.

Sale proceeds X
Less: Cost (price paid) (X)
Gain X

Question 9

SAYE

If an employee leaves voluntarily…

Answer 9

the options generally lapse, but the employee can either continue saving (with any bonus earned not taxable) or withdraw the savings to that point (with any interest paid not taxable).