NIM06808 | Class 1 NICs: Employment - Related Securities: Shares - Save as You Earn Plans

Paragraph 7A of Part 9 to Schedule 3 of the Social Security (Contributions) Regulations 2001

An approved Save as You Earn (SAYE) Plan is savings related and allows an employee or director to acquire an option to buy a certain number of shares at a fixed price at a particular time. All employees and directors, whether full or part-time, are eligible to participate although a company can specify a qualifying period of up to five years employment before participation.

Participants enter into a special savings contract to buy shares at the end of a fixed term and:

• the monthly savings must be between £5.00 and £500.00; and

• payments must be made on a weekly or monthly basis from salary or wages;

• the minimum number of monthly contributions is 36 and the maximum is 60.

Any shares acquired by an employee under an approved SAYE plan are excluded from the meaning of asset by virtue of section 701 of the Income Tax (Earnings and Pensions) Act 2003 and therefore cannot fall within the meaning of readily convertible asset as defined in section 702 of ITEPA - see NIM06835.

No NICs liability, or income tax charge, arises when the proceeds of the savings are used to buy shares. However, an income tax charge does arise if the option is exercised within three years because of takeover or the business unit in which the employee works is sold. No NICs liability arises because the shares cannot be said to be readily convertible assets.

See ETASSUM 30000 for further information about SAYE plans.