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HMRC internal manual

Shares and Assets Valuation Manual

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HM Revenue & Customs
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Tax Advantaged Share Schemes: approved savings related (SAYE) share option schemes

Approved savings-related share option schemes operate on the basis that all employees and all full-time directors of the company concerned must be offered the opportunity to participate in the scheme on similar terms.

The company which operates the scheme may grant to its directors and employees and to directors and employees of other group companies which are participating in the scheme, options over its shares or perhaps over shares of another group company. The scheme rules state which shares are to be used in the scheme.

The price at which invitations to apply for options are made must not be less than 80 per cent of the market value of the shares at the time the rights were obtained/date of grant, unless an earlier date is agreed.

Employees who take up the offer of options must take out a savings contract, often called Save As You Earn or Sharesave with a bank or building society. When the contract matures its proceeds equal the amount required to exercise the option. Contracts are for a three year period. Employees are not obliged to exercise their options at maturity; they can take out the proceeds of their savings contracts to spend as they wish and allow the options to lapse.

Market value is computed in accordance with the normal CGT basis - at the date of grant (or such earlier date as the rules allow).

SAYE guidance is available in the Employee Share Schemes User Guide at ESSUM30000.

  Additional Guidance:SVM150000