Last updated: 05 Sep 2023 11:00 Posted in:
UK employers that offer ‘save-as-you-earn’ (SAYE) schemes to employees should develop communication strategies that explain the tax-free bonus employees can benefit from now the initial bonus rate has been set, an expert has said.
The new bonus rates applying to SAYE savings contracts entered into by reference to invitations issued on or after 18 August 2023 were confirmed last month.
An SAYE plan, or Sharesave scheme, offers eligible employees the opportunity to buy shares in their employer (or parent company) on a tax-advantaged basis.
The bonus rate applicable to an SAYE savings contract is fixed by HMRC and is set when the SAYE invitation is issued. Due to very low interest rates, no bonus has been payable on SAYE savings contracts since the end of 2014. However, the position has changed with interest rates rising, and earlier this year HMRC issued new guidance on how the SAYE bonus rate will be calculated – with the new methodology applicable to SAYE invitations issued on or after 18 August.
SAYE expert Lynette Jacobs, of law firm Pinsent Masons, said: “Now that the bonus rates applying to SAYE contracts with invitation dates on or after 18 August have been confirmed, to obtain maximum benefit from the reintroduction of the bonus, companies who are issuing SAYE/Sharesave invitations which will have the benefit of the bonus should ensure that good communication strategies are in place so that employees understand what the bonus is and its positive impact on their SAYE/Sharesave options.”
HMRC is to publish guidance, keeping a record of the Bank of England base rate, SAYE plan bonus rates, and the effective date for any change.
