Employee Shares...

K9cuddles

Okay..

I've been signed up for a SAYE with my employee. I save £50.00 and at first I thought it was a really good idea.. as they took the money out of my pay cheque before I got it (to reduce temptation!) and you get to buy shares in the company at a reduce rate at the end of the term.

BUT... looking in to it further.. after saving for 3 years they will give you a bonus of 3.37% (1.9 of a monthly payment). If I do buy shares then I have to wait an additional 2 years to be able to cash them in Tax and NI free... so I'm thinking is it really worth it??

I'm sure I would be better withdrawing the money I have saved so far and sticking it in my First Direct E-Saver ato 5%... Does this sound the logcial thing to do??

Advice please!!

N.B I still buy £20 of shares a monthly which they match = £40.00 which I get dividend payments from, I think I should stick with this, but ditch the SAYE??

Clumsy_Girl

Are you really sure that you have to wait a further two years before you get the shares tax free? I used to run one of these schemes in the Company I work for and I am fairly sure that as long as it is a three year scheme, then you can sell the shares straight away without any tax and NI being due (you would be liable for Capital gains if the profit is more than the annual allowance I think.) This is because you use your net salary to but the shares so have paid the income tax up front.

It is the new Share Incentive PLan where you buy shares from pre-tax salary that you have to wait for a period before being able to sell them free from tax.

I may be wrong but make sure you have read the info fully and if you aren't sure there should be a scheme administrator that you can call.

spurs1234

You wouldnt work for one of the dixons group would you ? if you do stick with it they are very good i know a mate that doulbled his money over a 5 year plan paying 100 into it every month , thats 1300 a year at share saving of 20% of the shares at the time he walked away with just under 13000 that aint bad for a hundred a month ?

K9cuddles

It is the new Share Incentive PLan where you buy shares from pre-tax salary that you have to wait for a period before being able to sell them free from tax.

This sounds about right.. the min period is 5 years.. but they come out of trust after 3 years but will have NI and Tax applied.

You wouldnt work for one of the dixons group would you ?

Nope.. I'll stick with my free shares, but I don't think the SAYE is doing me any favours.. and I'd rather have more of my money in savings at this time then investments!

jonesMUFCforever

The shares that I have acquired over the years using share options under SAYE is now worth more than I have o/s on my mortgage; and that is after I usually spend approx half of them to pay for holidays and Home Improvements etc.
It is a great scheme whereby you cannot lose. The worst scenario is if the option price is higher than the market price you get your money back with interest!

K9cuddles

Okay. .I've looked in to my calcs..

If I were to leave the the money where it was and wait until the 5 year anni as of recent share price then I would be in profit £786.. BUT if I cash in after 3 years but before 5 years where NI & Tax applies I will actually loss out by £77!!!!

So I think I'm better off taking my money now and sticking it in a nice savings account!

I've still got my £20 for £40 montly purchase.. i'm sure that will keep me happy!

Stubbarama

While you are more than likely to get a better rate of return by investing your money into a savings account or bond etc, you must also remember that a SAYE scheme is a great way of saving.

When you joined the scheme you should have been given an option price to buy your companies shares when the scheme matures(e.g £1.00 per share), if your compnay performs well during the 3/5/7 yrs and the shre price goes up (to £1.50) what ever money you have invested can buy the shares at the orginal option price and then either hold on to them or sell them at the current market price.

So if you had put in £1000, you would have a holding worth £1500.

If on the other hand your company does not perform well, you can just take the money and bonus.

If you would like more information, Try to find out the Option price and Current market price, see if they are performing well or not.

Please PM me if I can help out, I working in the Stockbroking industry so I can get information on your compnay if you require.

cloud_dog

I think you are missing the point (a bit) and agree with Stubby.

The SAYE scheme is an investment in the company you work for, not a cash savings scheme, I do not think it is relevant to compare the interest awarded on your premiums against a top paying savings account.

You need to understand that this is an investment BUT, it is a guaranteed investment, i.e. no matter what happens you will NOT lose money. There aint nothing else in the investment world comes close to guaranteeing NO losses!!

Now if you dont have any faith in your company to grow the SP over the next 3 - 5 years then, by all means quit and put the money into a savings account.

ME, assuming the company was reasonably ok, Id dump as much money into a SAYE scheme as I could.

cloud_dog