Glossary · UK
What is SAYE / Sharesave Scheme?
An all-employee share option scheme where employees save GBP 5-500/month for 3 or 5 years, then use savings to buy employer shares at a fixed option price, with the gain income tax-free.
Full Definition
Save As You Earn (SAYE), also called Sharesave, is an HMRC-approved all-employee share option scheme. How it works: the company sets an option price at grant (can be up to 20% below the market price at grant date); employees save a fixed monthly amount (GBP 5 to GBP 500) into a special savings account for a 3-year or 5-year savings period; at maturity, the employee uses the savings (plus a tax-free bonus on 3-year schemes) to buy shares at the option price; if the share price has risen above the option price, the employee gains the difference -- this gain is exempt from income tax and NI; if the share price has fallen below the option price, the employee can simply withdraw the savings with no loss. Employees can transfer shares directly to an ISA within 90 days of exercise, deferring any subsequent CGT. All qualifying employees must be offered the scheme on the same terms. No income tax charge at exercise (unlike unapproved options).