A Save As You Earn Options plan is an all-employee plan which allows a company’s UK employees to acquire shares by first granting them options to acquire shares. A statutory tax relief means that they do not pay income tax or National Insurance (NI) on their gains
What happens if an employee doesn’t wish to exercise the option?
There is no obligation to exercise and if the option isn’t exercised, the employee may simply keep the savings and any bonus.
What happens to leavers?
Any employee who leaves due to redundancy, injury, disability or retirement must be allowed to exercise a proportion of their options linked to the amount saved so far and accrued interest (if any). Any option gains will not be subject to income tax or NI.
Can my company have SAYE?
Most independent companies will be able to meet the requirements of the SAYE legislation, but you will need to look at them carefully – preferably with professional help. Granting SAYE options over shares in a company which is controlled by another is an immediate problem, unless either of the companies is listed.
Shares must be:
- in a company not controlled by another
- ordinary shares, fully paid, not redeemable,
and (if the company has more than one class of share) either a majority of the class of shares used must not be held by directors or employees or (very unusually) that class of shares must give employees control.