What is a save as you earn (SAYE) scheme?

Save as you earn (SAYE) schemes are savings-related share option schemes that provide directors and employees with the option to buy a specific amount of shares in their employing company at a future date, whilst obtaining certain exemptions from income tax.

These schemes include contractual savings arrangements to which the participant contributes a fixed amount of salary at regular intervals over either a three-year or five-year contract period. These SAYE savings arrangements are self-certified by the employing company as meeting the relevant conditions.

Under the savings contract, the participant agrees to pay a fixed regular monthly sum of between £5 and £500 over the contract period. Contributions are normally made by a deduction from pay.

At the end of the contract period, known as the ‘bonus date’, the participant is entitled to an amount of money. This amount is the total contributions made and may include a tax-free bonus element (if the bonus rate is more than 0%), which may then be used to buy a number of