SAYE or Sharesave is an ‘all employee’ tax-advantaged share scheme which allows employees to build up a stake in their company by having money deducted from their monthly pay (after income tax and national insurance) over the life of the scheme, usually 3 or 5 years. Upon maturity of the scheme, the savings are used to buy shares in the company at a discounted price.
SAYE previously allowed for delays in contributions of up to six months; this temporary postponement on contributions pushed back the maturity date of the savings contract correspondingly. The difficulty arose if participants did not resume contributions on time at the seventh month, as that was treated as if the employee had chosen to stop making contributions permanently. This was a clear issue for employees taking maternity or paternity leave for longer than 6 months, as those who could not afford to restart contributions when required had no choice but to have their savings contracts prematurely cancelled.
In the Autumn Statement 2017, the Government announced an extension to the delay period up to 12 months for employees on qualifying parental leave. However, in March of this year, the news improved further – the extended 12-month delay period would now be available for all employees on SAYE plans, not just those taking parental leave.
These rules came into force on 1 September 2018, allowing all SAYE participants to take a break from contributions for up to 12 months total without their options lapsing. This is a tremendous result for ProShare, which has been lobbying for these changes on behalf of the share plan industry, and for their Head of Employee Share Ownership, Gabbi Stopp, who has been spearheading their efforts. The updated regime recognises how beneficial the SAYE scheme is to its participants, and that employees should not have to suffer their valuable options lapsing if they take leave for longer than 6 months, regardless of why that leave was taken.
The SAYE prospectus and guidance has been updated by HMRC to reflect these changes and can be found here.