Save As You Earn (S.A.Y.E.)

Updated: Aug 20, 2021

This must be read in a historical context.

A method of saving introduced in 1969 whereby employees could arrange for deductions from their pay, equivalent to a fixed monthly amount, to be invested automatically in National Savings; it constituted a contract for a five- or seven-year period at the end of which the amount saved would be repaid together with a prearranged bonus.

From 1975 the savings became index-linked and after the five-year period the amount repaid was equal to the index-linked equivalent of each contribution. If the savings were to be left invested for a further two years, then further index-linking would apply and a bonus of two additional monthly payments would accrue. Amounts not then withdrawn would still be index-linked and a nominal rate of interest would also be paid. This would be tax-free.

After 1980 the scheme changed in nature and became available to any person qualified to purchase shares under a share option scheme approved by the Inland Revenue. Contracts were again for five or seven years, with a tax-free bonus equal to eighteen or thirty-six monthly payments. In 1983 another scheme was introduced to operate concurrently with the 1980 scheme. In this share option series B scheme, bonuses were fourteen and twenty-four monthly payments after five and seven years respectively. There is an additional provision to cater for employees who change or leave employment during the progress of leave employment during the progress of participating employers. The monthly maximum payment has been increased to £100 from £50 in 1980 and £20 before that.

Under all S.A. Y.E. schemes there is pro¬ vision for persons unable to complete the S.A.Y.E. contract. Generally speaking, they are entitled to the return of their contributions and, if they have been paying in for more than one year, they will receive in addition a nominal amount of interest, which is at present 6 per cent. All benefits under S. A. Y. E. schemes are free of income tax and capital gains tax.

Reference: The Penguin Business Dictionary, 3rd edt.

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James Knight
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