Since 1 September 2018, employees with a savings contract under a SAYE scheme can delay monthly contributions up to a maximum of 12 times, without causing the savings contract to be cancelled. The prospectus states that if a person is unable to make contributions as a result of being furloughed or on unpaid leave during the COVID-19 pandemic the 12 months can be extended.
The SAYE scheme is a savings related scheme where employees of participating companies with share option schemes can save to buy shares at a discount. SAYE’s are approved by HMRC and that allow employees to make contributions and buy shares at a future date using the current share price (discounted by up to 20%). Employees can contribute up to £500 each month through the SAYE scheme.
The contributions are made from an employee’s taxed income and they are locked into a 3 or 5 year contract. At maturity an employee can choose to exercise the option to buy shares or take the proceeds and a bonus in cash. The interest and any bonus at the end of the scheme is tax-free and there is no Income Tax or National Insurance due on the difference between what you pay for the shares and what they’re worth. There can also be CGT savings if the shares are placed into an ISA or pension as soon as they are acquired.
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