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Included in the 2014 AGM Notice is a resolution (resolution – see jargon buster) to launch the Royal Mail SAYE scheme. Shareholders will be asked to approve the SAYE resolution at our AGM on 24 July 2014.
If the resolution is approved, eligible employees are likely to be invited to join the SAYE scheme in September 2014. We will bring you more information about the SAYE scheme following the result of the shareholder vote at the AGM.
If you have any questions about this mailing, you can call the Royal Mail Employee Shares Helpline free* on 0800 012 12 13. Lines are open 8.30am to 5.30pm, Monday to Friday (excluding UK bank holidays).
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Royal Mail's Save As You Earn (SAYE) scheme
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POSTMAN
- SITE ADMINISTRATOR
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- Joined: 07 Aug 2006, 03:19
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Royal Mail's Save As You Earn (SAYE) scheme
I Wrote-During Covid-Which is still relevant now
It's good to get these types of threads, the ridiculous my manager said bollox, so we can reassure ourselves that while the world is falling apart, Royal Mail managers are still being the low-life C***S they have always been.
My BFF Clash
The daily grind of having to argue your case with an intellectual pigmy of a line manager is physically and emotionally draining.
It's good to get these types of threads, the ridiculous my manager said bollox, so we can reassure ourselves that while the world is falling apart, Royal Mail managers are still being the low-life C***S they have always been.
My BFF Clash
The daily grind of having to argue your case with an intellectual pigmy of a line manager is physically and emotionally draining.
-
RobertT
- EX ROYAL MAIL
- Posts: 6458
- Joined: 09 Sep 2007, 14:26
- Gender: Male
Re: Royal Mail’s Save As You Earn (SAYE) scheme
Here's more info on SAYE schemes:
What is an approved SAYE share option scheme?
A SAYE share option scheme is a scheme, set up by your employer, under which you may be given a right, known as a 'share option', to buy a certain number of shares at a fixed price at a particular time. You can only buy the shares using amounts you have saved under a special Save As You Earn (SAYE) savings contract.
If the scheme meets certain requirements HMRC will approve it. Tax advantages are available to you for share options you receive under an approved scheme.
What is a share option?
A share option is a right to buy:
• a set number of shares in a company
• at a fixed price
• during a set period of time.
In a SAYE share option scheme, the price of the shares is fixed at the time you are given your option. The price must not be less than 80% of the market value of the shares at that time.
If the value of the company's shares increases, you can then exercise the option to buy shares, at the fixed price, during the set period of time.
Do I have to exercise my option to buy shares?
No. Whether you do or not will usually depend on the value of the company's shares at the time your savings contract ends. This value may be more or less than the fixed price at which you have the right to buy the shares. If you do not exercise your option, you get the proceeds of your SAYE savings contract in the usual way.
What are the requirements for a scheme to be 'approved'?
The main requirements for a scheme to be approved concern
• who can be granted options under the scheme
• all employees being able to take part in the scheme on similar terms
• the sort of shares that can be used in the scheme
• the fixed price of the shares under an option
• the set period of time for exercising an option to buy shares
• using only savings under a special savings contract to buy the shares.
What are the special savings contracts?
When you are granted your share option, you agree to save a fixed amount each month for a fixed period under a special Save As You Earn (SAYE) savings contract with a building society or bank. If you exercise your option to buy shares, you must pay for the shares from the amounts saved in your savings contract.
What are the tax advantages?
If you receive a share option because of your employment you may have to pay income tax when you
• receive the share option
• exercise the share option and buy shares
• benefit in any other way from the share option, for example if you receive something in return for giving it up.
If you get your share option under a SAYE share option scheme, which has been approved by us, you do not have to pay income tax
• when you receive your share option, or
• in most circumstances, when you exercise it to buy shares.
An additional tax advantage is that you can transfer any shares you get from that scheme into a stocks and shares ISA provided your ISA manager agrees to take them.
Who can take part?
You can take part in your employer's scheme if you are a UK employee with more than five years' service. A company may, if it wishes, provide for a shorter qualifying period of employment.
Does everyone receive the same size of options?
All employees within the scheme must take part on similar terms. The scheme cannot leave out or favour particular individuals or certain groups of employees. This does not mean that all employees have to be given an option to buy the same number of shares. The company is allowed, if it wishes, to vary the number of shares under option on a sliding scale depending, for example, on your length of service or level of pay.
Can I take part after I have left the company?
After you have left the company you cannot be granted any new options under the scheme. You may be able to exercise options you already hold, but this depends on the reason why you left the company.
Can I take part in more than one scheme?
Yes, but the total monthly amounts you agree to save under all schemes must not exceed the monthly savings limits, explained below.
How the savings link works
Under the special SAYE savings contract you enter into when you are given your share option, you agree to save
• a fixed amount per month
• for a fixed number of months.
At the end of your savings contract you will:
• receive a tax-free bonus payment
• normally be able to use your savings to buy up to the set number of shares in your option, at the fixed price.
How do I make my savings?
The amount that you agree to save each month is normally taken direct from your pay by your employer who sends it on to the building society or bank. There are special arrangements if you are paid weekly.
If you leave the company, payment of SAYE contributions by deduction from your wages or salary will end. If you wish, the bank or building society concerned may allow you, on request, to carry on paying monthly contributions into your SAYE contract.
How much can I save each month?
The monthly amount you agree to save must fall between certain limits. The limits are currently £5 and £250 (in whole pounds). After you have entered into your SAYE contract you cannot change the amount you pay each month.
How long must I save for?
The fixed period you agree to save for is either three or five years (36 or 60 monthly contributions).
At the end of the fixed period the SAYE contract pays a bonus. If your contract is for three years, you will be entitled to the three-year bonus, but no further bonus or interest will arise under the contract. If, however, your contract is for five years, you can choose to leave your savings in your SAYE account for a further two years. This will entitle you instead to a higher bonus after a total of seven years. You do not have to make any more monthly contributions to qualify for the higher bonus.
When must I decide how long to save for?
If your employer gives you a choice, you must decide when you are given an invitation to apply for a share option whether your contract is to be
• a three year contract (36 monthly contributions), or
• a five year contract (60 monthly contributions), or
• a seven year contract (60 monthly contributions, which are then left in your SAYE account for a further two years).
After you have entered into your SAYE contract you cannot change the length of it.
What bonus will I receive at the end of my SAYE contract?
For SAYE contracts which began on or after 1 September 2008
• the three year bonus is equal to 2.4 monthly contributions
• the five year bonus is equal to 7.0 monthly contributions
• the seven-year bonus is equal to 12.7 monthly contributions.
The rates of bonus in force when you enter the contract are included in the invitation document and will apply for the entire contract. The rates are reviewed annually; your employer will confirm the rates that apply on the date your contract starts.
What happens if I want my money back before the end of my SAYE contract?
If you want your money back before the end of your SAYE contract, what happens depends on how long ago you made your first payment under your contract.
• If it is less than a year, you get your money repaid but with no interest or bonus.
• If it is between one and five years, you get your money repaid with interest.
• If it is between five and seven years, you get your money repaid with a five-year bonus. You also get interest on this total amount for the period over and above five years.
For SAYE contracts, which began on or after 1 September 2008, the rate of interest is 3% a year.
Can I postpone my monthly contributions for a short period?
You can postpone up to six monthly contributions over the period of your savings contract without affecting your right to continue participating in the SAYE scheme.
For each monthly contribution you postpone, your SAYE savings contract is extended by one month which also delays the date of the bonus payable at the end of the contract.
If you fail to pay a monthly contribution on the seventh occasion then you will have stopped your savings contract and your savings will be returned to you. See the question above “What happens if I want my money back before the end of my SAYE contract?” which sets out what happens in those circumstances.
Where can I get more information about the special SAYE contracts?
A bank or building society will be able to give more information about the special SAYE contracts. Details of current bonus and interest rates in force can be found on HM Treasury website at http://www.hm-treasury.gov.uk" onclick="window.open(this.href);return false;
What shares are used in the scheme?
The shares must be part of the ordinary share capital of the company which has set up the scheme, or the company which controls it. They must have the same rights (for example, to dividends and bonus issues) as other shares of the same class. However, you will not receive dividends or be able to vote at company meetings until you have actually bought the shares.
The shares must be:
• listed on a Recognised Stock Exchange, or
• in an unquoted company which is not controlled by another unquoted company.
At what price can I buy the shares?
The price of the shares is fixed at the time you get your option. It must not be less than 80% of the market value of the shares at that time.
How many shares can I buy?
The number of shares you can buy depends on the amount you agree to save each month under your SAYE contract.
When you decide to take part in a scheme, you will already know how much the shares are going to cost. The amount you agree to save will produce the amount of money you need to pay for the number of shares you have the right to buy. For this purpose, you have to decide at the start whether or not you wish to include the bonus you will receive if you complete your SAYE contract.
When can I exercise my option to buy shares?
You can exercise your option to buy shares in the six months after you complete your (three, five or seven year) SAYE contract if, at that time, you are still employed by the company which set up the share option scheme. Some schemes may also allow you to exercise your option if, at that time, you are employed by an associated company.
What happens if I decide to stop saving?
If you decide to stop saving before you have completed your SAYE contract you will not normally be able to exercise your option to buy any shares. Exceptions to this general rule are explained below.
If you do not exercise your option you will get your savings back, with tax-free interest if you have saved for at least a year.
What happens if I leave the company before exercising my option?
If, before you complete your SAYE contract, you leave the company because
• of injury or disability, or
• you are made redundant, or
• you retire on reaching the retirement age which has been set for the purposes of the share option scheme you have joined, or
• you have to retire at any other age under the terms of your employment
you will normally have six months in which to exercise your option to buy as many shares as the proceeds of your SAYE contract, including any interest, will allow. You cannot use any other money to buy shares through the option scheme.
If you leave for any other reason, some schemes may also allow you to exercise your option within six months of leaving. In this case you must normally have held your option for three years. Again, you cannot buy more shares than the proceeds of your SAYE contract, including any interest, allow.
What happens if I continue to work after retirement age?
If you continue to work for the company after you reach the 'retirement age' set by the scheme rules, you will have an extra choice. During the six months after reaching the retirement age you may, if you wish, stop your SAYE contract and exercise your option to buy as many shares as the proceeds of the contract, including any interest, will allow.
What happens if I die before I can exercise my option?
If you die, your SAYE contract stops and whoever is legally responsible for your estate may exercise your option within 12 months of your death. If you die up to six months after the bonus date under your SAYE contract, they have until 12 months from the bonus date to exercise your option. If they do not exercise your option they can get your savings back, with any tax-free interest or bonus to which you were entitled.
What happens if my company is taken over or sold?
Some schemes may allow you to exercise your option to buy shares within a specified period if
• the company whose shares are used in the scheme is taken over, or
• the company you work for is sold out of a group
If you exercise your option in these circumstances within three years of receiving it, you may have to pay some income tax on the gain you make by doing so.
If the company whose shares are used in the scheme is taken over by another company, some schemes may allow you to exchange or 'roll over' your option. This means you exchange an option over shares in the old company for a new option over shares in the new company.
A 'roll over' has to be agreed to by the new company and the value of the new option must remain the same as the value of the old option. After a 'roll over' the new option will continue exactly as before and will be subject to the same rules as the old option. The major difference is that when you exercise the option you will obtain shares in the company that has taken over the original scheme organiser.
Will I be taxed when I receive my option?
No. You are not taxed when you receive an option under an approved SAYE share option scheme.
Will I be taxed when I exercise my option to buy shares?
You will not normally be taxed when you exercise your SAYE option to buy shares. You will be taxed only if, within three years of receiving your option, you exercise it because of a take-over or similar company reorganisation.
How much tax will I have to pay?
If your option does not qualify for income tax relief, you will have to pay income tax through your self assessment on the amount of the 'gain' you make by using your option to buy shares.
The amount of the 'gain' is
• what your shares are worth when you buy them, less
• the price you pay for your shares, less
• the amount (if any) you paid for the option itself when you received it.
Example
1/6/2003 You are given an option and agree to save £100 a month.
You do not pay anything for the option.
The fixed price of one share under your option is £1.25
1/4/2004 Your company is sold and you can exercise your option.
You have saved £100 a month for 10 months (£1,000).
10/4/2004 You exercise your option and your £1,000 savings to buy 800 shares at the fixed price of £1.25 each.
The shares are worth £2 each (total value £1,600).
The taxable amount is:
Value of shares when you bought them £1,600
Less amount paid for option (0)
Less price paid for shares (£1,000)
2004/05 Taxable amount (Gain) £600
Will I be taxed if I benefit from my option in any other way?
If you benefit in any other way from your share option, apart from exercising it to buy shares, you will normally have to pay income tax on the amount of the 'gain'.
For example, if you give up your option and in return receive money or something else of value, you will be taxed on
• the amount or value of what you receive for giving up your option, less
• the amount (if any) you paid for the option itself when you received it.
Example
1/6/2002 You are given an option over 1,000 shares
You do not pay anything for the option
1/2/2004 You agree to your option being cancelled and receive £1,500 in return
The taxable amount is:
Amount received for the cancellation of option £1,500
Less amount paid for option (0) __
2003/04 Taxable amount £1,500
The taxable amount will be subject to PAYE and NICs when it is paid to you. In these circumstances you could still continue with your savings contract however there would no longer be any right to obtain shares. Any terminal bonus or interest would continue to be free of income tax.
Will I be taxed if my company is taken over by another company?
If your company is taken over by another company, some schemes may allow you, if the new company agrees, to exchange your old option for a new option over shares in the new company. There is no tax to pay because of an exchange of options in this way.
You will only have to pay income tax when you exercise your option to buy shares in the new company if you exercise the new option within three years of receiving the original option because of another take-over or similar company reorganisation.
Will I be taxed on any bonus or interest on my savings?
No. Any bonus or interest you receive on your savings under the special SAYE contracts is tax-free.
Will I be taxed when I sell my shares?
Any gain you make when you sell your shares is chargeable to capital gains tax in the normal way.
For capital gains tax purposes your gain is usually
• the amount you receive from selling your shares, less
• the cost of your shares
The cost of your shares for this purpose includes the fixed price you paid for your shares and any amount which counts as income by reason of exercising the option.
You will not have to pay capital gains tax if your total chargeable gains (including the gains from the sale of the shares) in any tax year are less than the exempt amount for that year. For the tax year 2008/09 the exempt amount is £9,600.
Can I put my shares into an ISA?
Yes, you can transfer any shares you get from the exercise of your option into a stocks and shares ISA provided your ISA manager agrees to take them.
Dividends received and capital gains made on shares held in an ISA are free from tax and do not have to be declared to HMRC.
The shares transferred count as a subscription to the ISA equal to the value of the shares at the date of transfer. If no other subscriptions are made in the same tax year (from 6 April in one year to 5 April in the next year) shares worth up to £7,200 can be transferred into the stocks and shares ISA
The shares must be transferred within 90 days of exercising the option.
General information on ISAs can be found in our ISA helpsheet which is available on the HMRC website at http://www.hmrc.gov.uk/leaflets/isa-factsheet.htm" onclick="window.open(this.href);return false;.
Can I put my shares into a registered pension scheme?
Yes, you can transfer any shares you get from the exercise of your option into a registered pension scheme. The shares must be transferred within 90 days of exercising the option.
Keeping records
You are obliged by law to keep records of their income and capital gains to enable you to complete a tax return.
If you hold or receive shares or share options because of your job, you will need to keep information about when you received them, what they were worth and how much you paid for them.
Completing a tax return
Most employees do not get tax returns to complete because their income tax is collected by their employers through the PAYE system.
If you do not usually get a tax return, you must tell HMRC when you receive taxable amounts which have not been taxed through the PAYE system. You must do this by 5 October following the end of the tax year in which you received the taxable amounts.
If you have to pay any extra tax, HMRC will tell you how it will be collected or whether you need to complete a return.
If HMRC sends you a tax return to complete you must give actual figures for your income and gains.
You will also need to ask HMRC to send you the Additional Information Notes which contain details about share schemes when the return is issued after the end of the year. The notes tell you how to work out the figures of income.
You must tell HMRC about changes that could affect your tax position. If you do not, you may pay more than you should or find that you owe tax.
What is an approved SAYE share option scheme?
A SAYE share option scheme is a scheme, set up by your employer, under which you may be given a right, known as a 'share option', to buy a certain number of shares at a fixed price at a particular time. You can only buy the shares using amounts you have saved under a special Save As You Earn (SAYE) savings contract.
If the scheme meets certain requirements HMRC will approve it. Tax advantages are available to you for share options you receive under an approved scheme.
What is a share option?
A share option is a right to buy:
• a set number of shares in a company
• at a fixed price
• during a set period of time.
In a SAYE share option scheme, the price of the shares is fixed at the time you are given your option. The price must not be less than 80% of the market value of the shares at that time.
If the value of the company's shares increases, you can then exercise the option to buy shares, at the fixed price, during the set period of time.
Do I have to exercise my option to buy shares?
No. Whether you do or not will usually depend on the value of the company's shares at the time your savings contract ends. This value may be more or less than the fixed price at which you have the right to buy the shares. If you do not exercise your option, you get the proceeds of your SAYE savings contract in the usual way.
What are the requirements for a scheme to be 'approved'?
The main requirements for a scheme to be approved concern
• who can be granted options under the scheme
• all employees being able to take part in the scheme on similar terms
• the sort of shares that can be used in the scheme
• the fixed price of the shares under an option
• the set period of time for exercising an option to buy shares
• using only savings under a special savings contract to buy the shares.
What are the special savings contracts?
When you are granted your share option, you agree to save a fixed amount each month for a fixed period under a special Save As You Earn (SAYE) savings contract with a building society or bank. If you exercise your option to buy shares, you must pay for the shares from the amounts saved in your savings contract.
What are the tax advantages?
If you receive a share option because of your employment you may have to pay income tax when you
• receive the share option
• exercise the share option and buy shares
• benefit in any other way from the share option, for example if you receive something in return for giving it up.
If you get your share option under a SAYE share option scheme, which has been approved by us, you do not have to pay income tax
• when you receive your share option, or
• in most circumstances, when you exercise it to buy shares.
An additional tax advantage is that you can transfer any shares you get from that scheme into a stocks and shares ISA provided your ISA manager agrees to take them.
Who can take part?
You can take part in your employer's scheme if you are a UK employee with more than five years' service. A company may, if it wishes, provide for a shorter qualifying period of employment.
Does everyone receive the same size of options?
All employees within the scheme must take part on similar terms. The scheme cannot leave out or favour particular individuals or certain groups of employees. This does not mean that all employees have to be given an option to buy the same number of shares. The company is allowed, if it wishes, to vary the number of shares under option on a sliding scale depending, for example, on your length of service or level of pay.
Can I take part after I have left the company?
After you have left the company you cannot be granted any new options under the scheme. You may be able to exercise options you already hold, but this depends on the reason why you left the company.
Can I take part in more than one scheme?
Yes, but the total monthly amounts you agree to save under all schemes must not exceed the monthly savings limits, explained below.
How the savings link works
Under the special SAYE savings contract you enter into when you are given your share option, you agree to save
• a fixed amount per month
• for a fixed number of months.
At the end of your savings contract you will:
• receive a tax-free bonus payment
• normally be able to use your savings to buy up to the set number of shares in your option, at the fixed price.
How do I make my savings?
The amount that you agree to save each month is normally taken direct from your pay by your employer who sends it on to the building society or bank. There are special arrangements if you are paid weekly.
If you leave the company, payment of SAYE contributions by deduction from your wages or salary will end. If you wish, the bank or building society concerned may allow you, on request, to carry on paying monthly contributions into your SAYE contract.
How much can I save each month?
The monthly amount you agree to save must fall between certain limits. The limits are currently £5 and £250 (in whole pounds). After you have entered into your SAYE contract you cannot change the amount you pay each month.
How long must I save for?
The fixed period you agree to save for is either three or five years (36 or 60 monthly contributions).
At the end of the fixed period the SAYE contract pays a bonus. If your contract is for three years, you will be entitled to the three-year bonus, but no further bonus or interest will arise under the contract. If, however, your contract is for five years, you can choose to leave your savings in your SAYE account for a further two years. This will entitle you instead to a higher bonus after a total of seven years. You do not have to make any more monthly contributions to qualify for the higher bonus.
When must I decide how long to save for?
If your employer gives you a choice, you must decide when you are given an invitation to apply for a share option whether your contract is to be
• a three year contract (36 monthly contributions), or
• a five year contract (60 monthly contributions), or
• a seven year contract (60 monthly contributions, which are then left in your SAYE account for a further two years).
After you have entered into your SAYE contract you cannot change the length of it.
What bonus will I receive at the end of my SAYE contract?
For SAYE contracts which began on or after 1 September 2008
• the three year bonus is equal to 2.4 monthly contributions
• the five year bonus is equal to 7.0 monthly contributions
• the seven-year bonus is equal to 12.7 monthly contributions.
The rates of bonus in force when you enter the contract are included in the invitation document and will apply for the entire contract. The rates are reviewed annually; your employer will confirm the rates that apply on the date your contract starts.
What happens if I want my money back before the end of my SAYE contract?
If you want your money back before the end of your SAYE contract, what happens depends on how long ago you made your first payment under your contract.
• If it is less than a year, you get your money repaid but with no interest or bonus.
• If it is between one and five years, you get your money repaid with interest.
• If it is between five and seven years, you get your money repaid with a five-year bonus. You also get interest on this total amount for the period over and above five years.
For SAYE contracts, which began on or after 1 September 2008, the rate of interest is 3% a year.
Can I postpone my monthly contributions for a short period?
You can postpone up to six monthly contributions over the period of your savings contract without affecting your right to continue participating in the SAYE scheme.
For each monthly contribution you postpone, your SAYE savings contract is extended by one month which also delays the date of the bonus payable at the end of the contract.
If you fail to pay a monthly contribution on the seventh occasion then you will have stopped your savings contract and your savings will be returned to you. See the question above “What happens if I want my money back before the end of my SAYE contract?” which sets out what happens in those circumstances.
Where can I get more information about the special SAYE contracts?
A bank or building society will be able to give more information about the special SAYE contracts. Details of current bonus and interest rates in force can be found on HM Treasury website at http://www.hm-treasury.gov.uk" onclick="window.open(this.href);return false;
What shares are used in the scheme?
The shares must be part of the ordinary share capital of the company which has set up the scheme, or the company which controls it. They must have the same rights (for example, to dividends and bonus issues) as other shares of the same class. However, you will not receive dividends or be able to vote at company meetings until you have actually bought the shares.
The shares must be:
• listed on a Recognised Stock Exchange, or
• in an unquoted company which is not controlled by another unquoted company.
At what price can I buy the shares?
The price of the shares is fixed at the time you get your option. It must not be less than 80% of the market value of the shares at that time.
How many shares can I buy?
The number of shares you can buy depends on the amount you agree to save each month under your SAYE contract.
When you decide to take part in a scheme, you will already know how much the shares are going to cost. The amount you agree to save will produce the amount of money you need to pay for the number of shares you have the right to buy. For this purpose, you have to decide at the start whether or not you wish to include the bonus you will receive if you complete your SAYE contract.
When can I exercise my option to buy shares?
You can exercise your option to buy shares in the six months after you complete your (three, five or seven year) SAYE contract if, at that time, you are still employed by the company which set up the share option scheme. Some schemes may also allow you to exercise your option if, at that time, you are employed by an associated company.
What happens if I decide to stop saving?
If you decide to stop saving before you have completed your SAYE contract you will not normally be able to exercise your option to buy any shares. Exceptions to this general rule are explained below.
If you do not exercise your option you will get your savings back, with tax-free interest if you have saved for at least a year.
What happens if I leave the company before exercising my option?
If, before you complete your SAYE contract, you leave the company because
• of injury or disability, or
• you are made redundant, or
• you retire on reaching the retirement age which has been set for the purposes of the share option scheme you have joined, or
• you have to retire at any other age under the terms of your employment
you will normally have six months in which to exercise your option to buy as many shares as the proceeds of your SAYE contract, including any interest, will allow. You cannot use any other money to buy shares through the option scheme.
If you leave for any other reason, some schemes may also allow you to exercise your option within six months of leaving. In this case you must normally have held your option for three years. Again, you cannot buy more shares than the proceeds of your SAYE contract, including any interest, allow.
What happens if I continue to work after retirement age?
If you continue to work for the company after you reach the 'retirement age' set by the scheme rules, you will have an extra choice. During the six months after reaching the retirement age you may, if you wish, stop your SAYE contract and exercise your option to buy as many shares as the proceeds of the contract, including any interest, will allow.
What happens if I die before I can exercise my option?
If you die, your SAYE contract stops and whoever is legally responsible for your estate may exercise your option within 12 months of your death. If you die up to six months after the bonus date under your SAYE contract, they have until 12 months from the bonus date to exercise your option. If they do not exercise your option they can get your savings back, with any tax-free interest or bonus to which you were entitled.
What happens if my company is taken over or sold?
Some schemes may allow you to exercise your option to buy shares within a specified period if
• the company whose shares are used in the scheme is taken over, or
• the company you work for is sold out of a group
If you exercise your option in these circumstances within three years of receiving it, you may have to pay some income tax on the gain you make by doing so.
If the company whose shares are used in the scheme is taken over by another company, some schemes may allow you to exchange or 'roll over' your option. This means you exchange an option over shares in the old company for a new option over shares in the new company.
A 'roll over' has to be agreed to by the new company and the value of the new option must remain the same as the value of the old option. After a 'roll over' the new option will continue exactly as before and will be subject to the same rules as the old option. The major difference is that when you exercise the option you will obtain shares in the company that has taken over the original scheme organiser.
Will I be taxed when I receive my option?
No. You are not taxed when you receive an option under an approved SAYE share option scheme.
Will I be taxed when I exercise my option to buy shares?
You will not normally be taxed when you exercise your SAYE option to buy shares. You will be taxed only if, within three years of receiving your option, you exercise it because of a take-over or similar company reorganisation.
How much tax will I have to pay?
If your option does not qualify for income tax relief, you will have to pay income tax through your self assessment on the amount of the 'gain' you make by using your option to buy shares.
The amount of the 'gain' is
• what your shares are worth when you buy them, less
• the price you pay for your shares, less
• the amount (if any) you paid for the option itself when you received it.
Example
1/6/2003 You are given an option and agree to save £100 a month.
You do not pay anything for the option.
The fixed price of one share under your option is £1.25
1/4/2004 Your company is sold and you can exercise your option.
You have saved £100 a month for 10 months (£1,000).
10/4/2004 You exercise your option and your £1,000 savings to buy 800 shares at the fixed price of £1.25 each.
The shares are worth £2 each (total value £1,600).
The taxable amount is:
Value of shares when you bought them £1,600
Less amount paid for option (0)
Less price paid for shares (£1,000)
2004/05 Taxable amount (Gain) £600
Will I be taxed if I benefit from my option in any other way?
If you benefit in any other way from your share option, apart from exercising it to buy shares, you will normally have to pay income tax on the amount of the 'gain'.
For example, if you give up your option and in return receive money or something else of value, you will be taxed on
• the amount or value of what you receive for giving up your option, less
• the amount (if any) you paid for the option itself when you received it.
Example
1/6/2002 You are given an option over 1,000 shares
You do not pay anything for the option
1/2/2004 You agree to your option being cancelled and receive £1,500 in return
The taxable amount is:
Amount received for the cancellation of option £1,500
Less amount paid for option (0) __
2003/04 Taxable amount £1,500
The taxable amount will be subject to PAYE and NICs when it is paid to you. In these circumstances you could still continue with your savings contract however there would no longer be any right to obtain shares. Any terminal bonus or interest would continue to be free of income tax.
Will I be taxed if my company is taken over by another company?
If your company is taken over by another company, some schemes may allow you, if the new company agrees, to exchange your old option for a new option over shares in the new company. There is no tax to pay because of an exchange of options in this way.
You will only have to pay income tax when you exercise your option to buy shares in the new company if you exercise the new option within three years of receiving the original option because of another take-over or similar company reorganisation.
Will I be taxed on any bonus or interest on my savings?
No. Any bonus or interest you receive on your savings under the special SAYE contracts is tax-free.
Will I be taxed when I sell my shares?
Any gain you make when you sell your shares is chargeable to capital gains tax in the normal way.
For capital gains tax purposes your gain is usually
• the amount you receive from selling your shares, less
• the cost of your shares
The cost of your shares for this purpose includes the fixed price you paid for your shares and any amount which counts as income by reason of exercising the option.
You will not have to pay capital gains tax if your total chargeable gains (including the gains from the sale of the shares) in any tax year are less than the exempt amount for that year. For the tax year 2008/09 the exempt amount is £9,600.
Can I put my shares into an ISA?
Yes, you can transfer any shares you get from the exercise of your option into a stocks and shares ISA provided your ISA manager agrees to take them.
Dividends received and capital gains made on shares held in an ISA are free from tax and do not have to be declared to HMRC.
The shares transferred count as a subscription to the ISA equal to the value of the shares at the date of transfer. If no other subscriptions are made in the same tax year (from 6 April in one year to 5 April in the next year) shares worth up to £7,200 can be transferred into the stocks and shares ISA
The shares must be transferred within 90 days of exercising the option.
General information on ISAs can be found in our ISA helpsheet which is available on the HMRC website at http://www.hmrc.gov.uk/leaflets/isa-factsheet.htm" onclick="window.open(this.href);return false;.
Can I put my shares into a registered pension scheme?
Yes, you can transfer any shares you get from the exercise of your option into a registered pension scheme. The shares must be transferred within 90 days of exercising the option.
Keeping records
You are obliged by law to keep records of their income and capital gains to enable you to complete a tax return.
If you hold or receive shares or share options because of your job, you will need to keep information about when you received them, what they were worth and how much you paid for them.
Completing a tax return
Most employees do not get tax returns to complete because their income tax is collected by their employers through the PAYE system.
If you do not usually get a tax return, you must tell HMRC when you receive taxable amounts which have not been taxed through the PAYE system. You must do this by 5 October following the end of the tax year in which you received the taxable amounts.
If you have to pay any extra tax, HMRC will tell you how it will be collected or whether you need to complete a return.
If HMRC sends you a tax return to complete you must give actual figures for your income and gains.
You will also need to ask HMRC to send you the Additional Information Notes which contain details about share schemes when the return is issued after the end of the year. The notes tell you how to work out the figures of income.
You must tell HMRC about changes that could affect your tax position. If you do not, you may pay more than you should or find that you owe tax.
Links to all RM pension related websites are here
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- Posts: 240
- Joined: 31 Jan 2018, 20:21
- Gender: Male
Re: Royal Mail's Save As You Earn (SAYE) scheme
made a similar post on the Share Partnership & Matching scheme.
thought I'd raise this one from the dead of how my SAYE turned out.
590 Shares purchased @ £3.60
Gross Contribution from pay £2,124
Net cost on pay £1,444.32
Dividends issued but not taken as cash £716.79 (instead opted for Dividend Re-Investment Plan)
DRIP shares purchased 207 (average price paid £3.46)
Total Shares owned 797
Dividend paid as cash to date 15.94
Agreed Special Dividend £63.76
Agreed Sale of Shares £2,869.2
Share ownership Benefit £2,948.9
Total Profit of SAYE Scheme £1,504.58
Re the DRIP, giving up £716.79 of dividends over the years to build up 207 shares has resulted in £765.90. Not great, especially when you consider inflation. But still a welcome lump sum instead of the dribs and drabs of dividend payments.
thought I'd raise this one from the dead of how my SAYE turned out.
590 Shares purchased @ £3.60
Gross Contribution from pay £2,124
Net cost on pay £1,444.32
Dividends issued but not taken as cash £716.79 (instead opted for Dividend Re-Investment Plan)
DRIP shares purchased 207 (average price paid £3.46)
Total Shares owned 797
Dividend paid as cash to date 15.94
Agreed Special Dividend £63.76
Agreed Sale of Shares £2,869.2
Share ownership Benefit £2,948.9
Total Profit of SAYE Scheme £1,504.58
Re the DRIP, giving up £716.79 of dividends over the years to build up 207 shares has resulted in £765.90. Not great, especially when you consider inflation. But still a welcome lump sum instead of the dribs and drabs of dividend payments.