The Complete Guide to SAYE (save-as-you-earn) Schemes

SAYE’s
at a glance:

An SAYE scheme allows employees to save a fixed amount of their salary for a fixed amount of time in exchange for the opportunity to buy shares in their company at the end of the time period – often at lower than the market price – and receive significant tax benefits compared to regular earnings.

What is an SAYE?

Save as you earn (SAYE) schemes allow employees to buy stocks or shares in their own company at a fixed price over an agreed period, often at a discount, and grant significant tax advantages when compared to regular earnings.

How does
an SAYE work?

An SAYE scheme begins with the company making an offer to all their employees. At its most fundamental level, this offer will include the amount of money each month you as an employee can save, the time period that you can save for, and the stock price you will be able to buy at when the scheme expires.

If you decide to participate in the SAYE scheme, you choose how much you want to invest and for how long (subject to limitations). At the end of the scheme, you will have two options:

During the savings period, the money will sit in a qualified savings account, run and managed by an approved savings carrier.

Different types of SAYE’s

SAYE’s – known as ‘Sharesave’ in the UK – are by far the most popular type of these save as you earn schemes, but they are not the only ones. .

Types of approved share scheme are:

Employee Stock Purchase Plans

The Benefits of
an SAYE for an Employee

SAYE schemes are one of the best, risk-free, methods of building your financial portfolio. The benefits come from two main areas:

  1. Tax advantages
  2. Discounted shares
The tax benefits of SAYE schemes are significant and make it worthy of the investment alone. In most countries, you don’t have to pay any income tax on any gain you make through an SAYE scheme.

That monthly investment you make into your SAYE scheme – which would be subject to normal income tax rates – is also tax free. Taken together, this makes SAYE schemes both an efficient way to save money in the long term, and a low-risk way to invest.

You can find more details on taxes you may be liable to within an SAYE scheme here.

On top of the tax savings, many companies will offer their shares at a discounted rate. This means that your investment will be in profit on the day the scheme ends (providing the share price didn’t dip below the discounted rate) and, if the share price has gone up over the agreed period, your financial assets can look very healthy.

The benefits of an SAYE for an employer

The benefits of an SAYE scheme for an employer are significant enough to wonder why more companies don’t take advantage of them.

Firstly, an SAYE scheme benefits a company financially by allowing them to deduct the cost of establishing an approved SAYE scheme when calculating their tax liabilities, and no employer PRSI is payable.

The real advantages for a business though come from the sense of ownership, loyalty and accountability an SAYE scheme can give to an employee. By committing to the scheme, an employee is much more likely to commit themselves to the company itself, both in the length of their service and the quality of that service.

Hidden Risks of SAYE schemes

The financial risks are almost non-existent when it comes to SAYE schemes, particularly for you as an individual employee. If the share price drops below the initial offered price, you can simply ask for your savings back at the end of the agreed period.

If you leave the company during the agreed SAYE period, you may TBC.


For the employer themselves, an SAYE scheme again has limited-to-no risks. While there are no financial risks, there is a reputational risk within your workforce if share prices drop to such a degree that it highlights bad performance and effects morale.


If a company goes out of business during an SAYE scheme, then TBC.
If a company is taken over during an SAYE scheme, then TBC.

The tax benefits (and liabilities) of an SAYE

SAYE schemes are not subject to income tax, either when an employee is investing in their scheme on a monthly basis, or when they exercise their option and buy shares at the end of the scheme.

This doesn’t mean that SAYE schemes are entirely tax free. Depending on the country it is based in, SAYE schemes may be subject to local taxes. In Ireland, for example, any gains will be liable to employee PRSI and USC (universal social charge).

In the UK, you also do not pay income tax or national insurance on the difference between what you pay for the shares and what they’re worth, although you may be liable to capital gains tax when you sell. However, if you transfer the shares to an ISA (Individual Savings Account) or into a pension within 90 days of the scheme ending, you will no longer be liable for even this capital gains tax.

The Limitations of an SAYE

SAYE schemes, depending on the country and its laws, will have a number of restrictions on what they can do – typically in the amount an employee can save, the time period they can save for, and the size of the discount an employee can offer on the market share price.
Under Irish legislation for example, a participant can save a maximum of €500 per month and a minimum of €12 per month. The scheme can either run over 36 months or 60 months (3 or 5 years) and the maximum discount an employer can offer on the market share price is 25%.
It is similar in the UK, where SAYE schemes are limited to a maximum saving of £500 per month limit and £12 minimum – also over a 3 or 5 year period. The maximum discount a UK employer can offer on the market share price is 20%.

To SAYE or not to SAYE?

So, what are you waiting for?

As an employer, SAYE schemes are a great way to attract great talent, retain and motivate that talent, and improve performance across the board.

For the employee, SAYE schemes allow you to make a low-risk, low tax investment while becoming a part owner of your company and make a profit on your investment at the same time.