119/98
20 July 1998
SAVE AS YOU EARN (SAYE) SHARE OPTION SCHEME : NEW SERIES
The Treasury today announced a change to the bonuses offered as part of the above scheme. These rates will be introduced on 1 October 1998 and will replace the present April 1996 series.
The tax free bonus paid on SAYE will be:
- 2.75 times the monthly contributions for contracts repaid at the end of 3 years;
- 7.5 times the monthly contributions for contracts repaid at the end of 5 years; and
- 13.5 times the monthly contributions for contracts repaid at the end of 7 years.
The change means a reduction in the equivalent interest rates from:
- 5.26% to 4.83% for 3 year contracts;
- 5.53% to 4.65% for 5 year contracts; and
- 5.87% to 4.52% for 7 year contracts.
These returns are guaranteed and tax-free.
The interest rate on uncompleted contracts, repaid after one year, will be 3% simple interest per annum, tax-free. The rate will be 3% compound, tax-free, on contributions and bonus repaid between the fifth and seventh anniversary.
April 1996 series applications will not be accepted by the savings institution (a bank, building society or European authorised institution) if received after 30 September 1998. The first payment on a valid April 1996 series contract will still be accepted provided it is made by 31 December 1998.
Applications received by the savings institution on or after 1 October 1998 can only be accepted for the new October 1998 series.
The other terms for SAYE remain unchanged. Savings institutions wishing to offer the October 1998 series SAYE contracts should apply to HM Treasury for authorisation.
NOTE TO EDITORS
1. The SAYE Share Option Schemes are designed to widen share ownership by giving employees of a participating company the opportunity to buy its shares on advantageous terms. The SAYE contract enables them to save up a lump sum by monthly contributions of between £5 and £250. Only the employees of companies whose savings related share option schemes are approved by the Inland Revenue are eligible to participate.