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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

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HM Revenue & Customs
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Schedule 3 SAYE option schemes: Linkage to Savings (Arrangement): Early exercise of options before bonus date

If an option-holder has a right of “early” exercise (i.e. before the maturity of his savings contract), he has a choice of:

  • exercising his option to the maximum extent possible (see below), or
  • exercising his option to a lesser extent, using only part of his savings up to the “early” exercise date (see below),  or
  • not exercising his option at all and obtaining repayment of his savings with any interest or bonus to which he is entitled (see below).

If the employee chooses to exercise his option to the maximum possible extent he may use all of his monthly savings up to the date of exercise and, if he chooses to exercise at the end of the 6 month exercise period following cessation of employment, any monthly savings contributions during that 6 month period. However it is not possible for participants to pay future monthly contributions in a lump sum (i.e. in advance of the monthly dates on which they are due), so that a larger repayment is available with which to exercise their options (see ETASSUM34110).

If the employee chooses to exercise his option to a lesser extent, using only part of his savings up to the “early” exercise date, he must take the balance of his savings in cash. Once a repayment has been taken from a savings contract, it is not possible to continue making further payments under it.

If the employee chooses not to exercise his option he can either:

  • obtain repayment of all of his savings to date with any interest to which he is then entitled, or
  • leave his savings in his savings contract and carry on making the remainder of the 36 or 60 fixed monthly contributions to obtain the bonus, then take his repayment in cash.