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SAYE Update: Government Delays Contributions Holiday Extension

The government has announced that the extension of the Save As You Earn (SAYE) contributions holiday from six months to twelve months will be delayed until 1 September 2018 to allow for technical issues to be worked through and for SAYE administrators to update their IT systems.

In its Autumn Budget, the government announced that it would be extending the contributions holiday for SAYE participants from six months to twelve months. However, the government’s subsequent silence over the details of the implementation led to growing concern in the share schemes industry. The announcement is therefore a welcome development.

The government has further revealed that the contributions holiday will no longer only apply to participants on parental leave but will also include those who experience severe illness or serious financial hardship.

Whilst these developments are widely accepted as positive, were they to effectively extend the duration of the standard 3-year SAYE plan to variable lives of 3-4 years, this could potentially pose a challenge from an accounting perspective.The valuation of SAYE options might become more complex and the accounting costs increase. This may, in a worst case scenario, deter companies from establishing SAYE plans in the first place. To prevent this, guidance may be needed from HMRC as to the standard for determining participants who will qualify for the holiday.

Pett, Franklin & Co. LLP are experts in employee share schemes, executive incentives and share valuation. To find out more about how we can help you or your client, please contact William Franklin at william.franklin@pettfranklin.com or call 0121 348 7878.

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