We no longer check to see whether Telegraph. To see our content at its best we recommend upgrading if you wish to continue using IE or using another browser such as Firefox, Safari or Google Chrome. Employee most widely used scheme is Save as You Earn SAYE — also known as Sharesave or Savings Related Share Option Schemes. This government-backed scheme was launched inand offered generous tax breaks to encourage employees to take a direct stake in their company. HM Revenue Figures show that options number of firms offering these schemes has declined in recent years, but there are still more than companies offering this perk. If you work for one offering an SAYE it is worth signing up: Put simply, this scheme is a one-way bet: But if share prices fall, you get your money back — plus a reasonable tax-free bonus. Stock money is normally deducted from stock pay each month. At the end of the term, employees can exercise an option to buy shares at a price that was fixed at the outset — usually at a 20 per cent discount on their original value. If, at the end of the plan, the shares stock worth less options this "offer price", staff stock take back their money, with a cash bonus. Fewer firms allow workers to save as they earn. Under HM Revenue rules this is normally equivalent to just over six monthly payments on the five-year plan. But if the shares are worth more, they can exercise the share option and can buy the shares at a discount, sell them immediately, and realise the gain — or hold them for the longer term. Ms Jones, who works at the Bridgend Extra Store, agrees. These schemes aren't quite as generous as they once were, but they they are still worth doing, as you can't lose out. But while these share schemes are risk-free at the outset, there is the potential to turn sour once the share option has been exercised. Peter Leach, a director of Killik Employee Services, says: He points out that many people invest each year into different tranches of these three- and five-year plans. As they mature they simply retain the share certificates, as part of their longer-term investment plans. This may mean that a disproportionate part of their money is invested in one company. Mr Leach recommends cashing in shares when schemes mature and spreading the investment across a range of assets. Anyone who contributes to an employee share scheme has the option of transferring the shares directly into an Individual Savings Account Isa. Provided this is done within a day time frame, there is no tax liability. Or, more simply, moving the money into an Isa, which is CGT-free. Those who leave a company mid-way through an SAYE will, in most cases, receive their savings to date, plus explained. But if you are made redundant, or have to leave through ill-health, there is usually the option to buy the discounted shares. There are other riskier types of share schemes, stock Share Incentive Plans SIPs employee, launched 11 years ago. These schemes are offered by almost companies — including Lloyds TSB, Prudential and British Land. Under SIPs employees can buy shares from their gross salary, which therefore gives a 40 per cent discount for higher-rate taxpayers. Shares usually have to be held explained a minimum of five years before they can be sold. In some SIPs staff are also given shares for free or on a buy-one-get-one-free basis. Obviously getting shares free, or at a significant discount is a good deal, employee the risk with SIPs is that the employee is exposed to the stock market from day one. These risks were highlighted by explained Northern Rock debacle. An estimated 85 per cent of explained bank's 6, staff had signed up to its SIP. But once the bank was nationalised these shares were effectively worthless. But the advantage of this scheme is that it does shield savers from CGT on any subsequent gain. A third type of scheme is the Company Share Option Plan. CSOPs are not available to all employees and are used to tie senior employees into a company. Find out how to invest in recovery with this free guide. Help protect yourself options Identity Fraud with CreditExpert. The best way to transfer money overseas. Howard Marks, an Oxford University graduate turned drug smuggler, made millions. Now he eagerly awaits royalty cheques. Paul Daniels wasted too much on Ferraris but has made a fortune on his home - despite the flood. Following George Osborne's announcement of the Budget, The Telegraph looks at the numbers on the UK's economy and financial health. George Osborne should simply abandon changes that will reduce incentives to save and create yet more uncertainty. A light-hearted quiz about the gaping maw of financial misery that perpetually threatens to devour us all. Accessibility links Skip to article Skip to navigation. Wednesday 14 June Andrew Oxlade Time to panic? No, follow the investment rulebook. Kyle Caldwell My five investment resolutions for Richard Evans Bank security: James Anderson This is why I'm worried for investors in the FTSE How employee share schemes work More than 1, companies offer some type of share-save scheme, including banks, retailers and airlines. And just under 2 million employees are now contributing to options tax-efficient savings plans. An estimated 85pc of Northern Rock's 6, staff signed up to its SIP, a type employee share-save scheme. The kitchen coup — how cash shifted the balance of power over household chores. The inspector calls — and house prices jump. How the Ofsted effect could add thousands to the value of your house or send it sliding. George Osborne's speech in charts. Just stop tampering with pensions, Chancellor. How much should you be panicking about your finances? 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Employee Stock Options: Taxes
Employee Stock Options: Taxes
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This is the main reason that a lot of people want to have the driving age raised.
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