ETASSUM34100 - Schedule 3 SAYE option schemes: Linkage to savings (arrangement): Changes to prospectus
Paragraph 26 Schedule 3 of the Income Tax (Earning and Pensions) Act 2003 (ITEPA)
HMRC has updated its mechanism for calculating the bonus rates for SAYE participants. From 18 August 2023 the bonus rates and early leaver rates are calculated with reference to the Bank of England Bank Rate which is available at Change in bonus rates for Save As You Earn (SAYE) Share Option Schemes - GOV.UK (www.gov.uk)
The Monetary Policy Committee (MPC) set the Bank of England Bank rate, the new Bank rate usually applies from the day following the MPC meeting and the new bonus rate will apply to SAYE agreements made under invitations which are sent on or after the fifteenth day following the date the new Bank rate applies.
Details of how the bonus rate is calculated are set out in the bonus rates automatic mechanism, HMRC issued a new Specimen Save As You Earn (SAYE) prospectus to give effect to the mechanism, which will not require replacement to update the bonus rate in future.
Changes in bonus rates may present difficulties in the timing of an invitation as it must be clear from the outset what bonus rates apply to a particular invitation.
The starting date of the contract shall be the day on which the first monthly contribution is received by the bank (or such later date as a person and the bank may agree) subject to any postponement of that date applied under paragraph 20 of the prospectus.
If the specification by the Commissioners or the requirements to be met by the Scheme is varied in such a way that the contract could not have been entered into under the specification as varied, the specification is withdrawn, or a change to the bonus rate is made in accordance with the bonus rate mechanism document before the starting date, the contract shall terminate unless the starting date is within three months of the date of:
the variation or withdrawal of the specification or
the date on which the new bonus rate applies.