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UK Treasury Announces Change In Bonus Rates For SAYE Scheme

by Robert Lee, Tax-News.com, London

04 September 2008

HM Treasury on Wednesday announced changes in the bonus rates for the Save As You Earn (SAYE) (Sharesave) scheme that will maintain SAYE in line with other interest rates.

SAYE is one of four tax-advantaged schemes administered by Her Majesty's Revenue and Customs (HMRC) and is part of the Government's initiative to promote wider employee share ownership across the UK.

The bonus rates were last changed on April 4, 2008.

  • For 3 year contracts, the bonus rate is now 2.4 x the value of the employee's monthly payments (compared to 1.6 x previously), with an effective interest rate of 4.23% (up from 2.84%).
  • For 5 year contracts, the bonus rate is now 7.0 x the value of the employee's monthly payments (up from 5.1 x), with an effective interest rate of 4.36% (compared to 3.22%).
  • For 7 year contracts, the bonus rate is now 12.7 x the value of the employee's monthly payments, (compared to 9.8 x), with an effective interest rate of 4.28% (up from 3.36%).

    • Employees who sign up to SAYE will receive the bonus rate for the relevant contract that was in force at the time they joined the scheme. They will not be affected by future bonus rate changes.

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