HM Revenue and Customs (HMRC) is to increase the bonus rates payable on five-year sharesave schemes.
A new bonus rate of 0.6 times monthly contributions and an annual equivalent rate of 0.39% will be applied to these schemes from 28 July 2014.
This is the first time a bonus rate will be applied to five-year sharesave schemes since 2011.
Employees in sharesave schemes will be entitled to the bonus rate on the total amount of contributions when they have completed the payment of 60 monthly contributions and the scheme matures on the fifth year of its starting date.
Employees will receive the bonus rate that was in place when they joined the sharesave scheme and will not be affected by future changes, so those in existing sharesave schemes are not affected.
The bonus rates for a three-year scheme will not change.
Phil Ainsley, managing director, employee services at Equiniti, said: “The sharesave bonus rates are automatically adjusted by linking them to average three and five-year swap rates.
“Recent announcements from the Bank Of England’s Monetary Policy Committee and speculation about when interest rates will go up is reflected in current rising swap rates, triggering a rise in the sharesave bonus rate.
“Since the start of the new tax year, 87% of [sharesave] launches have raised the monthly savings limit and participation levels have risen significantly.
“I see this as positive news for organisations offering sharesave as an attractive employee benefit that will increase participation and generate higher levels of engagement.”
