When is an SAYE scheme appropriate?
When is an SAYE scheme appropriate?

The following Share Incentives practice note provides comprehensive and up to date legal information covering:

  • When is an SAYE scheme appropriate?
  • Attractions of SAYE schemes
  • Can the company qualify to operate an SAYE scheme?
  • Size of company
  • Stage of company’s development
  • When is an SAYE scheme particularly appropriate?
  • Flotations
  • Corporate acquisitions and mergers
  • Does the SAYE scheme meet the company’s objectives?
  • Overseas parent company with UK workforce
  • More...

This Practice Note covers the following topics:

  1. attractions of save as you earn (SAYE) schemes

  2. can the company qualify to operate an SAYE scheme?

    1. flotations, and

    2. corporate acquisitions and mergers

  3. when is the SAYE scheme particularly appropriate?

  4. does the SAYE scheme meet the company’s objectives?

    1. overseas parent with UK workforce

    2. employee incentive requirements

    3. ongoing administrative burden and costs

    4. accounting treatment, and

    5. timing

Attractions of SAYE schemes

SAYE schemes tend to be attractive to employees because:

  1. they are a tax-efficient way of acquiring shares in their employer at a discount of up to 20% from their value when the option was granted—generally if exercised after three years of their date of grant or in certain circumstances before three years, SAYE options are income tax and NIC-free and the proceeds of selling the shares are subject only to capital gains tax. For details of the tax treatment of SAYE options, see Practice Notes: SAYE—income tax and NIC treatment of options and SAYE—capital gains tax treatment of options

  2. they encourage employees to save in a tax-efficient way

  3. they offer the employee flexibility—there is no real exposure to share price movement in relation to their award as there is no obligation on employees to exercise their options and instead, employees can simply withdraw their savings (with a potential tax-free bonus if they keep saving for the period of the savings

Popular documents