Drop in bonus rates for SAYE schemes
HM Revenue and Customs (HMRC) has announced changes to the bonus rates paid on employee savings schemes.
Some five million employees in the UK are members of SAYE schemes, which allow them to save up to £250 a month for periods of three or five or seven years.
Once the savings period has ended, employees receive a tax-free bonus, which will have been added to their savings.
This they can take as cash or they can use it to buy shares in the company for which they work, often at a rate reduced by 20 per cent from the share price as it stood when they first joined the scheme.
The rates, however, at which bonuses are paid changes as from 12 September, HMRC has said, in order to keep them in line with other interest rates.
The bonus rate for three-year contracts is 0 per cent; for five-year contracts it is 0.59 per cent (down from 1.16 per cent); and for seven-year contracts it is 1.15 per cent (down from 1.74 per cent).
The early leavers’ rate stays at 0 per cent.
Employees who are already saving under existing SAYE contracts are not affected by the changes.
More details can be found at http://www.hmrc.gov.uk/shareschemes/index.htm