Everyone knows share prices can fall as well as rise, but fewer people know about “the only government-backed, risk-free route into the stockmarket”: Save As You Earn (SAYE) plans, says Ian Cowie in The Daily Telegraph. SAYEs were introduced 31 years ago to encourage staff to own a stake in their firm and enjoy tax breaks. Today, 1.7 million people are members.
If you’re lucky enough to have the option (your employer has to be a listed firm), SAYE is a “win-win”. You commit to invest between £5 and £250 a month for a fixed period of three or five years. At the end of that time you decide whether to use the accumulated cash to buy shares in your employer’s firm at a discount of up to 20% of the price when the SAYE scheme began (without paying income tax or NI on the difference between what you pay for them and their value at that point). When you sell the shares you can avoid capital gains tax by moving them directly into an Isa or a pension. If you decide not to buy the shares, you can take the money as tax-free cash “with a little interest added”.