On 9 May 2025, HM Revenue & Customs (HMRC) confirmed revised bonus and early leaver rates applicable to Save As You Earn (SAYE) employee share option schemes. The updated rates will take effect from 23 May 2025 and apply to all SAYE contracts granted on or after that date.
The SAYE scheme, widely referred to as Sharesave, is a tax-efficient, government-backed savings and share purchase plan that allows employees to set aside a fixed monthly amount from their post-tax income over a term of three or five years.
At the end of this period, employees can either withdraw their savings with a tax-free bonus or use the funds (plus the bonus) to purchase company shares at a previously agreed price, typically set at a discount.
To reflect recent changes in interest rates and financial conditions, HMRC has revised the bonus and early leaver rates for SAYE. The new rates effective from 23 May 2025 are:
a. Three-year SAYE bonus rate: 0.7%
b. Five-year SAYE bonus rate: 1.9%
c. Early leaver rate (applicable where an employee exits the scheme early for specific reasons such as redundancy, disability or retirement): 0.83%
These rates represent a modest but notable increase, suggesting a return to more rewarding conditions for employee savers, following an extended period during which SAYE bonus rates were at or close to zero due to historically low interest rates.
Existing SAYE contracts are unaffected and will retain the rates in force at the time they were initiated.
Employers operating SAYE schemes should inform their payroll, HR and share plan administrators of the update to ensure correct communication and accurate documentation for new savings invitations issued on or after the implementation date.
Why This Matters to you
While SAYE schemes have traditionally been associated with larger corporations, an increasing number of SMEs are exploring employee share schemes as a means of attracting, rewarding and retaining key staff, especially in competitive labour markets or high-growth sectors.
The updated bonus rates make SAYE more financially attractive for employees, enhancing its value as part of a broader remuneration and engagement strategy. For SMEs, this is particularly relevant at a time when many are competing with larger employers on non-salary benefits and workplace culture rather than base pay alone. The increase in bonus value provides an additional incentive for employees to remain with the business over the medium term, directly supporting retention goals.
For early-stage or scaling businesses, SAYE also provides a low-risk, low-cost way to offer share participation without the tax complexity of more bespoke arrangements. The administrative burden is relatively light, especially when compared to discretionary share schemes or complex equity structures. With proper planning and communication, a SAYE scheme can serve as a powerful tool to build staff loyalty and alignment with business success, even for companies with lean internal resources.
From a tax perspective, SAYE schemes also offer important National Insurance and income tax advantages. Employees benefit from tax-free bonuses and potential capital gains on shares acquired at a discount.
For employers, there are no NIC liabilities on the grant or exercise of options under SAYE, and corporation tax relief is generally available on the difference between the market value of shares at exercise and the amount paid by the employee.
At Taxoo we feel this update represents an opportune moment to reassess the viability of launching or expanding a SAYE scheme. It may also serve as a prompt to review current employee incentive strategies and explore how equity participation could fit into their long-term workforce and growth plans.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
