SAYE and SIPs

In this lesson

1. 0:00 Employee share schemes overview
2. 0:36 Save As You Earn scheme explained
3. 1:36 Share Incentive Plans fundamentals
4. 2:28 Four types of shares in SIPs
5. 3:49 Tax treatment by holding period
6. 5:19 Non-tax advantaged scheme taxation
7. 6:04 Tax advantaged scheme taxation
8. 6:39 Readily convertible assets defined
9. 7:41 Employer tax implications

About this lesson

This video covers the key differences between these schemes, the types of shares employees can receive, and the specific tax treatment for both employees and employers — essential knowledge for the TX and ATX papers. SAYE schemes allow all employees to save between £3 and £5 per month (up to £500 monthly) to purchase company shares at a discount of up to 20%. You'll learn that there's no income tax on grant or exercise, but capital gains tax applies when shares are sold. SIPs work differently: employers award shares held in trust, which can include free shares (up to £3,600 annually), partnership shares bought from pre-tax salary, matching shares issued by the employer, and dividend shares from reinvested dividends. The tax treatment depends on how long shares are held in trust — over five years gives full tax advantage with no income tax on withdrawal, while shorter periods trigger income tax and National Insurance charges on certain share types. The video also explains the tax position for non-advantaged schemes and the concept of readily convertible assets, which determines whether National Insurance is due. You'll understand when employers can deduct scheme costs and National Insurance contributions, and how business asset disposal relief may apply on sale. This detailed treatment is critical for exam success and real-world application in advising clients on share scheme taxation.

Duration: 8m