UK SAYE Sharesave outcome.
Gain on exercise
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Total saved
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Shares purchased
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Your breakdown
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A share option with the downside removed
Save As You Earn, often branded Sharesave, is one of the most employee friendly schemes HMRC sanctions. You agree to save a fixed monthly amount, up to £500, for either three or five years. At the start your employer sets a strike price at which you can later buy shares, and that strike can be discounted by up to 20% below the market price on the day the scheme opened. When the contract matures you face a simple choice. If the shares are worth more than your strike, you use your savings to buy at the locked in price and pocket the gain. If they are worth less, you walk away with your cash savings and buy nothing. That asymmetry, all of the upside with none of the capital risk, is what makes SAYE distinctive, and this calculator models the outcome.
Five years of £250 a month
Suppose you save £250 a month for the full five year term, a £5 strike price was set at the outset, and the shares are worth £8 at maturity. Over 60 months you save £15,000. At a £5 strike that buys 3,000 shares. Those shares are now worth £24,000, so your gain over what you saved is £9,000.
Had the shares instead fallen to £4, below your £5 strike, exercising would mean paying £5 for something worth £4, so you would simply take your £15,000 savings back and buy nothing. The chart shows how your end position depends entirely on where the share price lands relative to the strike.
The tax angle, and where CGT can sting
SAYE is generous on income tax. When you exercise the option and buy at the discounted strike, there is no income tax or National Insurance on the gain between the strike and the market price, which is what makes the discount so valuable. The catch comes later, on disposal. If you sell the shares for more than you paid, the further growth is a capital gain, and only the annual capital gains tax exempt amount, currently £3,000, is free. A gain of £9,000 like the one above would leave £6,000 potentially taxable if you sold everything at once. The clean fix that HMRC explicitly allows is to transfer the shares straight into an ISA within 90 days of exercise, sheltering future growth from CGT entirely. This tool is for employees deciding whether to join a Sharesave scheme, and for those approaching maturity working out what their option is worth.
Choosing between the three and five year contract
When you join, you pick a savings term, and the tool lets you model either. Both are funded by the same monthly contributions, but they behave differently. The longer five year contract gives the share price more time to grow above your strike, which historically improves the odds of a worthwhile gain, and it lets you save more in total at the same monthly rate. The shorter three year contract ties your money up for less time and gets you to the choice point sooner, which suits anyone who values flexibility or is unsure how long they will stay with the employer. Historically both terms paid a tax-free bonus on your savings if you held to maturity, but bonus rates have sat at or near zero for several years, so in practice the return now comes almost entirely from the share price gain rather than the bonus. Whichever term you choose, the strike price and the discount are locked at the start, so the decision is really about how long you are comfortable committing the monthly sum.
Employee questions
Can I increase or stop my monthly savings partway through?
You cannot increase the monthly amount once the contract is set, but you can usually reduce or pause payments for a limited number of months, and the maturity date simply pushes back to collect the missed contributions. If you stop entirely or leave the company in most circumstances, the scheme typically ends and you get your savings back, though the rules on leavers depend on the reason for leaving, so check your plan terms.
What happens to the discount if the share price rises a lot?
The strike is fixed at outset, so a rising share price only widens your gain. That is the whole point. Your buying price stays at the discounted £5 in the example no matter how high the market climbs, which is why a strong performing employer can turn a modest monthly saving into a sizeable windfall over five years.
One judgement worth making early: concentration risk. Holding shares in the company that also pays your salary doubles your exposure to its fortunes, so a sensible discipline is to take the SAYE gain and then sell or diversify rather than letting a single employer's stock balloon into a large slice of your wealth. The scheme is close to free money on the way in, but it should not quietly become an unbalanced bet on one company.