company share schemes

skintpaul

Now working at a large insurance firm, they have various benefits on offer, though unsure which one to go for..

Either a matched share buy scheme (effectively half price, if you save a regular amount each month, ongoing)..

or

share save options - 3 or 5 year savings plan, with option to by company shares at a discounted price (set at start of plan) - possibly massive profit, if shares go up, or you can take the money saved at the end, if shares not doing so good at the time.. need to sty in for full 5 years, to (legally!) avoid tax..

Harveys_2

Can you do both?

If you can afford it...I would...I do. :beer:

chris_m

skintpaul wrote: »

Now working at a large insurance firm, they have various benefits on offer, though unsure which one to go for..
Either a matched share buy scheme (effectively half price, if you save a regular amount each month, ongoing)..
or
share save options - 3 or 5 year savings plan, with option to by company shares at a discounted price (set at start of plan) - possibly massive profit, if shares go up, or you can take the money saved at the end, if shares not doing so good at the time.. need to sty in for full 5 years, to (legally!) avoid tax..

I think you're mixing up the conditions a bit - I suspect (based on what my last employer's schemes were) that it's the matched purchase scheme that ties you in for 5 years to become free of tax, especially if it's done from pre-tax income.

Sharesave schemes usually use savings taken from salary after tax so there is no tie-in to avoid tax. You are, however, committed to saving for the full term of the scheme if you wish to exercise the option to buy at the option price - with a few exceptions, e.g. I've just retired so was able to exercise my option for incomplete schemes using my savings to date.

As Harveys said, if you can do both it's definitely worth considering.

Pincher

I was in a five year SAYE scheme, and then got made redundant half way. The fixed purchase price was about £5.

The share price had gone up to £18 at one point, but the company's fortunes turned, hence the need for cuts. The redundancy terms allowed me to exercise the option to buy with the funds already saved up. They had to go through a charade for three months to prove there was no alternative work for us, but a colleague who tried to apply to another department was quickly told to forget it.

The share price kept falling. At last, I managed to get the shares, and sold at ~£10.

The colleagues who kept their jobs kept contributing until maturity, but the share price had plunged to ~£1. Obviously they got their money back. Could have got more by just putting the money in a deposit account.

Rumour has it, that a long term employee, who kept his shares over the years, but sold up at the peak, managed to get £100k. I hope he had put them in ISAs, otherwise the CGT would have been horrendous.

On the whole, it's safe, so if you can spare the money, go for it.

I would do it just for the tax savings.

gadgetmind

Pincher wrote: »

I hope he had put them in ISAs, otherwise the CGT would have been horrendous.

You can transfer £15k of SAYE shares directly into an ISA within 90 days of exercise, and you then have a £11,100 CGT allowance. If you're married, you can double this allowance by moving shares around, so £37k tax free each tax year. We did well on some SAYEs and did this for a few years (though with lower allowances) and also used my wife's full 18% CGT bracket.

Share price now lower and we've just taken the cash from some SAYEs. However, it's a one way bet, so always worth filling your boots!