Interest rates rise for Employee Share Schemes

HM Treasury has changed the bonus rates for the Save As You Earn (SAYE) (Sharesave) scheme, bringing SAYE in line with other interest rates. SAYE is one of four tax-advantaged schemes administered by HMRC and is part of the Government's initiative to promote wider employee share ownership across the UK. It allows employees to save between £5-250 a month promoting employee share ownership.

Some 96 companies in the FTSE 100 offer an employee share ownership scheme as well as hundreds of other companies across the UK. Approximately 1.7 million employees are currently participating in such a scheme.

Commenting on the interest rate rise, Fiona Downes, Head of Employee Share Ownership at ifs ProShare, said, "This is good news for the 500,000+ employees who sign up to a SAYE scheme each year because the revised rates will allow employees to buy more shares under the scheme or receive a greater return on their savings. This should encourage greater take up of what is already a very tax efficient savings mechanism."

The bonus rates were last changed on 1 September 2006. The new bonus rates from 1 September 2007 (previous rates in brackets) will be:

• 3 years - 4.23% (3.19%)
• 5 years - 4.48% (3.46%)
• 7 years - 4.46% (3.52%)
• Early leaver rate* - 3% (2%)

*For those who withdraw their funds after 12 monthly contributions but before the scheme matures.

03 September 2007 © Moneyextra.com

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