BAYE scheme - advice please

Looter

Hi,

I buy shares in the company I work for, I invest the max £125 each month but I'm wondering if this is suitable as a long-term investment. I've never bought shares before so I don't have expert knowledge in the field so I could do with some advice.

The shares are bought on a monthly basis with the funds I pay in each week, the first month I bought 57 shares at 2.53 with which I received 6 matching shares from the company, this month I bought 42 shares at 2.71 along with 6 free shares from the company.

I have to keep the matching shares for 3 years before I can cash them in, and 5 years to get them free of tax and NI. I'm just wondering, surely there must come a point when it's not worth carrying on investing, as I would be buying the shares at a higher price in time (assuming they go up in value). I thought about investing for 5 years, then keep the shares in trust for another 5 years to get all the shares tax and NI free. Would that make any sense?

Any hints and thoughts welcome, thanks!

StephenM_2

I'm in a similar scheme. £125 a month contribution and I get 15% free shares.

The £125 I pay is free of income tax (20% for me) and national insurance (10.4%), so I am effectively paying £87 a month for £143.75 worth of shares. I can't sell the matching shares for 3 years and the purchased shares must be kept for at least 5 years to avoid a tax and NI liability. Shares older than 5 years are called matured shares.

Also I need to take into account the cost of selling. In my case it is US$30 a time (the shares are US shares, not UK), so it would be uneconomic to sell every time a new month's worth matured.

So my plan is not to sell until I've got about 2 years worth of matured shares. So, subject to my view of market conditions at time, I plan to sell the first batch 7 years after starting and every 2 years afterwards until I leave the company. When I leave I can sell all of them regardless of how long I've held them.

I do have other investments and a fair amount of cash savings, so I'm not taking a huge risk in this scheme. I probably wouldn't do it otherwise.