Bonus rates on three-year SAYE share option contracts were reduced to zero with effect from 12 August. Employees’ savings under existing SAYE contracts are not affected by the changes, announced on the HMRC website.
UHY Hacker Young warned two years ago that the rates of bonuses added to employee contributions were so low that employees who decided not to exercise their options would see ‘almost no return’ on their investment.
‘Participation by employees in SAYE schemes to buy shares in the company they work for is still 40% below its peak in 2001/02 and this latest step may deter participation in the scheme,’ the firm said this week.
Roy Maugham, Tax Partner at the firm’s London office, said the latest reduction was poorly timed as the current stock market turbulence will make a lot employees question whether they want to enter a SAYE scheme.
‘If the government is in favour of broadening employee share ownership they shouldn’t be allowing HMRC to cut the interest on these accounts to such a derisory level,’ he said. ‘Those joining SAYE schemes now will be locked into a savings account that pays just zero interest for the next three years, unable to benefit from any increase in prevailing interest rates between now and 2014.’
'Attractive'
SAYE bonus rates have reduced slightly due to falling market swap rates, HMRC said. ‘Despite the slight change, the key benefit to employees is unaffected as shares can be purchased at a discount of up to 20% of market value. The potential growth in share value still ensures that SAYE remains an attractive scheme.’
A spokesman added that the rates are set under an established formula, linking bonus rates to market swap rates, which is described on the HMRC website.
Bonus rates on three-year SAYE share option contracts were reduced to zero with effect from 12 August. Employees’ savings under existing SAYE contracts are not affected by the changes, announced on the HMRC website.
UHY Hacker Young warned two years ago that the rates of bonuses added to employee contributions were so low that employees who decided not to exercise their options would see ‘almost no return’ on their investment.
‘Participation by employees in SAYE schemes to buy shares in the company they work for is still 40% below its peak in 2001/02 and this latest step may deter participation in the scheme,’ the firm said this week.
Roy Maugham, Tax Partner at the firm’s London office, said the latest reduction was poorly timed as the current stock market turbulence will make a lot employees question whether they want to enter a SAYE scheme.
‘If the government is in favour of broadening employee share ownership they shouldn’t be allowing HMRC to cut the interest on these accounts to such a derisory level,’ he said. ‘Those joining SAYE schemes now will be locked into a savings account that pays just zero interest for the next three years, unable to benefit from any increase in prevailing interest rates between now and 2014.’
'Attractive'
SAYE bonus rates have reduced slightly due to falling market swap rates, HMRC said. ‘Despite the slight change, the key benefit to employees is unaffected as shares can be purchased at a discount of up to 20% of market value. The potential growth in share value still ensures that SAYE remains an attractive scheme.’
A spokesman added that the rates are set under an established formula, linking bonus rates to market swap rates, which is described on the HMRC website.
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