Tag Archives: bonus rates

Bonus rates fall again for employee share schemes

The Treasury has announced another reduction in the bonus rates for the Save As You Earn (SAYE) sharesave scheme.

The scheme was set up to encourage more employees to own shares in their companies. Employers pay a proportion of an employee’s monthly earnings into a bank or building society for a period of 3, 5 or 7 years.

At the end of the period, the employee can take their savings and a tax-free bonus or they can use the cash to buy shares in their employers’ company, usually at a discount of 20 per cent below the share price as it stood at the start of the period. The Treasury said that the latest move was intended to keep the rates in line with other interest rates.

For three-year contracts, the new bonus rate is 0.6 times instead of 1.5 times the value of an employee’s monthly payments. This represents a cut in the interest from 2.67 per cent to 1.08 per cent.

For five-year contracts, the new bonus rate is 2.6 times instead of 4.8 times the value of an employee’s monthly payments, reducing the interest from 3.04 per cent to 1.67 per cent.

In the case of seven-year contracts, the new bonus rate is 5.6 times rather than 9.3 times the value of an employee’s monthly payments, with the rate of interest coming down from 3.20 per cent to 1.98 per cent.

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