UK Save As You Earn explained

A SAYE plan offers a monthly savings contract to the employee, over a 3, 5 or 7 year period, where the participant can use the savings accumulated over the fixed chosen period, along with a tax free HMRC stipulated bonus multiple of the monthly savings amount, to acquire shares in the company at a fixed price, the option price, determined at the start of the savings contract. (Please note that for the 7 year contract, participants can only save on a monthly basis for 5 years and then hold the accumulated savings for a further 2 years to receive a greater tax free bonus.)

The participant can save between £5 and £250 per month but can not save more than £250 per month for any open SAYE plans.

The option price is effectively the market value of a share at the time of grant (there are several ways to determine the market value) and the company can discount this price by up to 20%. The shares granted must be equal in class to the company’s fully paid shares listed on a recognised stock exchange.

At maturity of the savings contract, the participant has 6 months to use the savings and bonus to either:

• Exercise the option to acquire some or all of the shares at the option price; or
• Take the cash.

The participant can only exercise the option once but if cash is elected, the option can still be exercised within the 6 month period following maturity.