Thousands of workers cheer SAYE increase
A little-noticed measure announced in Thursday's Autumn Statement could prove to be a tremendous boost for tens of thousands of lower-paid workers who save through their company's share option scheme.
The tax-free limit on save-as-you-earn (SAYE) schemes is to double, allowing workers to put away as much as £500 a month, up from the present £250 cap.
In SAYE schemes, employees receive a profit from the sale of their shares at maturity, based on any increase in their company's share price over that time, and pay no tax on those proceeds. If they decide to keep the shares, they can then shelter them from tax in an ISA or pension.
Meanwhile the annual limit allowed in partnership shares in share-incentive plans (SIPs) will climb from £300 to £1,800.
Andy Caton of Yorkshire building society (YBS) – which runs 300 of the UK's work-based saving schemes – said: "There are real advantages in encouraging employees to directly benefit from the success of their employers, so the doubling of the tax-free limit by the Government is great news.
"Almost a quarter of the 170,000 employees who save through schemes managed by YBS Share Plans are at their limit of what they can save, so this is a very positive move."
Recent research by York University and Leeds University showed 39 per cent of those who use SAYE only save in this way, rising to 58 per cent for workers who earn less than £20,000.
"Many people who benefit from the success of their companies would ... not put aside money for the future without the ease of saving money from their salary every month," said Mr Caton.
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