In our newsletter on the Autumn statement last November (here) we were pleased to report that the government had announced that employees on maternity and parental leave would be able to take up to a 12 month pause from saving into their Save As You Earn (SAYE) savings contracts. This was an increase from the current 6 month break. With time counting down to the previously expected implementation date of 6 April (the start of the new tax year), we have been waiting for more information and a major announcement has just been released.
What was the announcement?
There were two important developments:
- The first was that the introduction of the extended savings holiday has been postponed from 6 April 2018 to 1 September 2018. The delay is to allow for software changes and testing.
- The second announcement was very good news indeed. Following representations from the share plan industry, the extension of the SAYE savings holiday from 6 to 12 months will apply to all SAYE plan participants from 1 September. This means that all participants in SAYE plans will be able to benefit from the 12 month savings holiday – it will not be limited to participants on maternity or parental leave. The extended savings holiday also applies to participants in plans that are in place prior to 1 September 2018. As a result, from 1 September, all participants in existing and new plans will be able to delay the payment of up to 12 monthly contributions.
HMRC has released draft guidance notes and draft prospectus changes (here), which are still subject to review.
This is a fantastic result for ProShare which has been lobbying on behalf of the share plan industry both to extend the savings holiday and to give plan administrators time to put in place the necessary system updates in time for the implementation of the new provisions. Although there is a 5 month delay in the introduction of the change, the extension to cover all existing and future plans mitigates against the postponement in the start date. The change is a huge boost to employees who, for many reasons, may need to take a break from contributing towards their SAYE plan and would have had no choice but to allow valuable options to lapse if the break went beyond 6 months. In allowing employees this additional opportunity to pause contributions, the government is acknowledging the value of this type of plan to employees. It is excellent news.
If you want to discuss any of the points above or want help with your UK plans, please do contact us.
Hannah, Sally and Rebecca