How is a Save As You Earn (SAYE) Sharesave scheme taxed in the UK?

Full answer

Save As You Earn (SAYE), commonly called Sharesave, is an HMRC tax-advantaged all-employee share scheme. You agree to save a fixed monthly amount, from GBP 5 up to GBP 500, deducted from your net pay over a 3-year or 5-year savings contract. At the start your employer sets an 'option price' at which you can later buy shares; this can be discounted by up to 20% of the market value at grant. At the end of the term you use your savings to exercise the option and buy shares at that fixed price, or you can take your cash back instead. The key tax advantage is that no Income Tax and no National Insurance are due on the difference between the discounted option price and the market value when you exercise. This contrasts with unapproved options, where the gain at exercise is taxed as employment income. Who it affects: employees of companies that operate an SAYE scheme, which must generally be open to all eligible staff. Capital Gains Tax (CGT) can apply when you eventually sell the shares, calculated on the growth from your purchase price. For 2026/27 the Annual Exempt Amount is GBP 3,000, with CGT charged at 18% within your basic-rate band and 24% above it. A planning route: you can transfer the shares directly into an ISA (within 90 days of exercise, up to the GBP 20,000 annual ISA allowance) or into a pension, sheltering future gains from CGT. Worked example: you save GBP 250 a month for 3 years (GBP 9,000) and buy shares worth GBP 14,000. The GBP 5,000 'discount and growth' at exercise is free of Income Tax and NI. If you later sell for GBP 16,000, the GBP 2,000 gain is within the GBP 3,000 CGT exemption, so no CGT is due. Use the capital gains tax calculator to model a sale, and check current scheme rules on gov.uk.

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