SAYE option scheme
A type of employees' share scheme ( www.practicallaw.com/6-107-6213) that meets the requirements of Schedule 3 of the Income Tax (Earnings and Pensions) Act 2003, referred to in ITEPA 2003 as a Schedule 3 SAYE option scheme. It is also known as a sharesave scheme, save as you earn option scheme or savings related share option scheme. It provides for the grant of share options ( www.practicallaw.com/0-107-6937) . The exercise price can be set at up to a 20% discount to the market value at the time of grant.
Participation must be available to all employees, subject to a qualifying period of service which cannot be more than five years (and other employees may also be included). The grant of the option is conditional on the employee taking out a linked savings arrangement with a bank or building society to save up the option exercise price. Option holders save up to £500 per month from salary. Options are normally exercisable for six months after three or five years. Such schemes must be notified to HM Revenue & Customs ( www.practicallaw.com/6-200-6399) (HMRC) and the company must certify that the scheme complies with Schedule 3 of the Income Tax (Earnings and Pensions) Act 2003.
For more information, see Practice note, SAYE option schemes (sharesave): overview ( www.practicallaw.com/2-616-4169) .