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What are sharesave schemes?
Sharesave schemes, also known as save as you earn (SAYE) schemes, allow employees to buy shares in their organisation with their savings for a fixed price; they are effectively building up savings and sharing in their employer’s success.
Sharesave schemes are one of the HM Revenue and Custom (HMRC)-approved workplace share schemes that offer tax advantages to employees, alongside share incentive plans (Sips), company share option plans (Csops) and enterprise management incentives (EMIs).
Sharesave schemes offer long-term appeal as an employee benefit; encouraging saving and investing in the organisation not only brings financial rewards to staff, but can also foster employee engagement, retention and motivation.
The scheme allows employees to start a savings contract in a bank or building society of a fixed amount each month between £5 and £500, for a specified period of typically three or five years.
At the end of this savings term, employees can exercise their options and buy shares in their organisation at a discounted, pre-agreed price. They could also choose to withdraw their savings, and they have the option to transfer their shares to a pension or an individual savings account (Isa). Sharesave is considered a low-risk route into share ownership; if the organisation’s share price has risen during the savings period, employees can buy shares at a bargain price and potentially profit from the difference. If the share price falls, they can choose to take back their savings with no losses incurred.
Schemes must be offered on an all-employee basis, in that all employees must be invited to participate.
What are the cost implications?
Employees can choose to save a set amount each month between £5 and £500. The costs for employers will relate to establishing the scheme and the administration. They will also have to consider the costs of communicating the scheme to staff.
The costs incurred when setting up the scheme are allowable as a deduction when working out the organisation’s profits for corporation tax purposes.
Are there any tax or legal issues?
The tax advantages of sharesave schemes are that the interest and any bonus at the end of the scheme is tax free. Employees also do not pay income tax or national insurance (NI) on the difference between what they paid for the shares and what they are worth.
RM2 Partnership calls attention to the point that to benefit from these tax advantages, certain legislative rules need to be followed so it is important to get advice from an expert when setting up and running a sharesave arrangement.
A share plan adviser will be able to assist the employer in setting up a plan and establishing a set of plan rules, which will ensure that the scheme meets the requirements of Schedule 3 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).
If the shares are subsequently sold, capital gains tax (CGT) may apply. If an employee transfers their shares to a pension or an Isa within 90 days of exercising the sharesave option, CGT will not be triggered.
What are the current market trends or developments?
HMRC figures, updated in June 2025, found that in the tax year ending 2024, £2.09 billion of sharesave options were granted to 340,000 employees. Data from Equiniti as at 31st December 2024 found that, on average, monthly contributions per employee across all their savings contracts was £205 per month.
According to Equiniti, employers are providing additional financial education to their employees at sharesave maturity, to ensure they are aware of CGT, how to report it if it is due, as well as setting out ways to mitigate CGT, for example, selling over different tax years, the use of Isas, and transferring shares to a spouse or civil partner or pension.
Who are the main providers and what types of schemes do they offer?
Providers include Computershare, Equiniti, JP Morgan Workplace Solutions and RM2 Partnership.
Where can employers get more information?
Sharesave schemes are governed by HMRC, and more information can be found at https://www.gov.uk/tax-employee-share-schemes
