[seɪv æz juː ɜːn (ɛs-eɪ-waɪ-iː)]
Save As You Earn (SAYE) is a scheme that allows individuals to buy shares in their company for a fixed price, and also receive a tax-free bonus.
Save As You Earn (SAYE) is a savings scheme in the United Kingdom which allows Employees to buy shares in the company at a fixed price. It was introduced to encourage employees to save more and provide them with an incentive to work on growing the company they work for.
The scheme allows an individual to save up to £500 a month. At the end of the savings contract, which is typically 3-5 years, employees are entitled to use the savings to buy shares in the company.
This scheme is popular as there are many tax benefits associated with it. Firstly, the interest and any bonus given at the end of the scheme is tax-free. Also, the employee is not required to pay Income Tax or National Insurance on the difference between what they paid and what the shares are worth.
Capital Gains tax may be owed when shares are sold but can be avoided if the shares are transferred to an ISA within 90 days of the scheme ending, or a Pension directly when the scheme ends.
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