Simplification measures for SAYE plans
Save as you Earn (SAYE) plans are all employee share option plans approved by HMRC.
A number of procedural changes are being made in relation to the rate of tax free bonus payable under the SAYE plan. The most significant change relates to situations where the bonus rate changes between the initial invitation to employees to participate in the plan and the employee signing up to the plan.
Currently, where this occurs, the employee's application is, strictly, invalid as the invitation reflects the old bonus rate which has been withdrawn. Going forward however, HMRC will be able specify that the old rate will be applicable to any applications received within 30 days of the date of the change.
The other changes are as follows.
- Responsibility for setting the bonus rate currently rests with HM Treasury but going forward, the rates will be set by HMRC.
- When changes in bonus rates are to be communicated by HMRC to the savings carrier, this may now be effected by electronic communication (rather than post as was previously required).
- The minimum time period between the notification of the change of interest rates and the revised rates taking effect will be reduced from 28 days to 15 days.
Who will be affected?
Strictly, the changes apply to the bank or building society to which employees make their monthly contributions. However, they will clearly also be of relevance to those companies who offer an SAYE plan to their employees.
The changes will have effect on and after 29 April 2009.
These changes are generally welcome as employers and employees will know, at the time of invitation, what bonus rate will actually be available to the employee. They also allow the bonus rates to be adjusted more swiftly to reflect market conditions.