Sharesve Scheme & Share Incentive Plan

gav_sw20

Ah thanks guys that makes perfect sense now. And I did get the net vs. gross incorrect, apologies.

We also have another share scheme named Direct Save, which is taken from gross salary and is tax and NI free if kept for 5 years.

I'm just wondering which is the best one to go in to.

The first one I posted about is only open once a year in May but the one above can be started any time.

ermine

bowlhead99 wrote: »

So as the average tenure in a job is probably lower now than it was a few decades back, that may be a consideration ; you might think being around for a 3 year payout is less risky than aiming for a bigger 5 year payout and then needing to keep your job whether you still want it or not.

A good point and as I was coming to the end I took that line - I split the difference across the 3 and 5 year schemes. Which meant putting more per month into the 3 year scheme to compensate for 36 contribs instead of 60. The company was good enough to let me get out with about 4 years of the 5 year scheme as part of the payoff as well as all of the 3. And all my SIP shares became unembargoed on leaving too. But all these details were in the fine print of the schemes, and there was a lot of it...

ermine

gav_sw20 wrote: »

We also have another share scheme named Direct Save, which is taken from gross salary and is tax and NI free if kept for 5 years.

I'm just wondering which is the best one to go in to.

Depends on your goals in life and specific tax circumstances. And of course the prospects for your company over the next 3/5 years.

Sharesave is pretty much a no brainer - if some financial disaster comes up you can usually extract your cash early, though do read the scheme terms.

For HRT payers DirectSave offers some of the advantages of a SIPP without the wait to 55 malarkey and a very restrictive investment choice. It also helps borderline rich child benefistas dodge the clawback in the same way as pension contributions, if that applies.

Either way, a 42% leg-up over 5 years is a good safety margin.

Although it falls into the esoteric and comes with a bazillion wealth warnings, if you really don't like the downside risk you can hedge the share price by spread betting the shares short, although your employment contract may prohibit shorting your company's shares. No reason a significant other mightn't be of the opinion your company is going down the pan, however Obviously that also cuts you off from any upside gains, leaving just the tax benefit (less the cost to carry the spreadbets)...

You can do both Sharesave and directsave, BTW - I did, to the max. There's a case to be made for doing directsave on a monthly basis so you get pound cost averaging, as opposed to as an annual lump sum.