Checklist: How to create a Sharesave scheme

A Sharesave scheme (also known as Save-as-you-earn, SAYE option scheme or SAYE) is an HMRC (HM Revenue and Customs) approved, tax-advantaged employee share scheme available in the UK. It is a flexible and effective way to share company ownership with your UK-based employees as part of their remuneration package.

If you’re looking to create a SAYE scheme, this checklist is going to walk you through it step-by-step in plain English.

How does an SAYE scheme work?

An SAYE plan operates by putting a participants’ monthly contributions (from between £5 and £500 – which is approximately $6.4 – $640) – into a savings pot for the length of the plan. When the plan ends, employees can use their savings to purchase shares at a previously agreed price or simply take back all their savings.

For participants an SAYE not only seeks to offer financial and tax benefits, but additionally, the safety element allows them to ask for all their savings (contributions) back should the share price drops below the exercise price, i.e. the agreed purchase price that was set at the outset.

For you as an employer, the scheme can help you improve employee recruitment, retention and motivate your staff to work harder to grow the business, as an increase in the share price over the term will be to their benefit. Your company may also qualify for corporate tax relief under SAYE. Check out our complete guide to Sharesave to learn more about how it works and its benefits.

Checklist for setting up a SAYE scheme

1. Check Eligibility
2. Consider your scheme design and rules
3. Seek scheme approval
4. Inform HMRC of your SAYE scheme
5. Implement your program details & rules
6. Plan the content of your employee communications
7. Invite all eligible employees to enrol
8. Track all events and administer them on a daily basis

1. Check eligibility

To be eligible to offer a SAYE scheme, your company needs to meet the following conditions:

• The company shares must be ordinary shares, fully paid up and non-redeemable.
• The scheme has to be offered to all employees/directors who have 5 years service or more with a company.
• All qualifying employees and directors must be eligible to participate on “similar terms”.
• The company must notify the scheme to HMRC to confirm that the scheme meets the statutory requirements. This notice must be given by 6 July following the end of the tax year in which the first grant of the SAYE option is made.

2. Consider your scheme design and rules

There are a number of key components to be considered for a scheme, such as the term of the scheme, employee eligibility, participants’ contribution, exercise price, enrollment period, exercise period etc. To streamline this process it can help to involve multiple departments across your company, e.g. legal, HR, payroll, accounting, earlier to help refine your proposed scheme, ensure compliance and identify any invisible roadblocks.

• Length of the scheme (i.e. how long is the savings contract): Under a SAYE option scheme, participants enter into a savings contract that can be either 3 years or 5 years, meaning they will make 36 or 60 monthly contributions.
• Employee eligibility: You can choose to include newer employees (fewer than 5 years of service) under this scheme.
• Participants’ contributions: The monthly savings contributed by participants must be between £5 and £500 ($6.4 – $640). You can choose to set your own limits within these.
• Exercise price: The SAYE option exercise price must not be less than 80% of the market value of the shares at the time the option is granted.
• Other SAYE scheme rules to consider include the invitation period, exercise period, termination rules and whether contract suspension and change in the contribution is allowed.

3. Seek scheme approval

Once you have the rules and details sorted, you’ll need to check if shareholder and/or board approval is needed for the scheme to be established.

4. Inform HMRC of your SAYE scheme

You must notify the scheme to HMRC to confirm that it meets the statutory requirements. This notice must be given by 6 July following the end of the tax year in which the first grant of the SAYE option is made under the scheme.

5. Implement your program details & rules

While it’s not impossible to implement a Save-As-You-Earn plan in-house using a spreadsheet, doing so can potentially lead to human errors such as mistakes in data entry or the circulation of multiple document versions, especially when you need to run your US and UK stock plans in parallel.

If you leverage an Employee Share Scheme provider like us, you and your share plan team can rely on our experienced implementation team to migrate all your data while adhering to strict data protection rules. Following extensive data reconciliation to ensure accuracy and consistency, the platform will then start to automatically run your plan based on the configured settings under the supervision of our professional equity compensation team.

With the ability to compliantly offer equity awards globally, our automated platform can scale with your company as both your business and plan grow.

6. Plan the content of your employee communications

Right from the time you begin to consider launching a plan you should start planning your employee communications to inform them about what the scheme is, how it works and how it could benefit them.

You should make sure your employees are regularly informed about the plan, starting from the enrolment phase, all the way to the exercise period. Tell them the key dates, actions they need to take and things to consider. Don’t forget to explain the reintroduced bonus since August 2023.

It’s important to keep your communications simple, clear and visual to improve the SAYE enrollment and engagement rate. To learn more about how to create a communications pack that engages your staff, click here to speak with one of our team members.

7. Invite all eligible employees to enroll

You should allow enough time for your UK employees to enroll. This is usually a couple of weeks because if this period is too short, they won’t have time to do research and ask any questions they may have.

Tip: If you partner with an employee share scheme provider, make use of their online enrollment system. This can save you time, help reduce human errors, track the instant enrollment rate and share contracts easily with participants, potentially boosting the participation rate.

8. Track all events and administer them on a daily basis

SAYE administration is a complex process where many departments can be involved in the plan during implementation and/or ongoing administration. As mentioned in step 2, bringing in these key stakeholders early on in the process can help to making the administration process more efficient.

What now?

At J.P. Morgan Workplace Solutions, we’ve helped businesses to set up and administer their SAYE schemes from launch through to maturity, including processing employee data, enrolment, managing contributions, task tracking, reporting, tax and compliance and everything in between.

Contact us if you want to understand more about how to launch and administer your Save-As-You-Earn. Our automated software, combined with on-the-ground equity professionals, can help you launch and manage the scheme for the UK workforce and ensure that you remain compliant with local regulations. Book a one-on-one, no-obligation consultation today.