Save as you earn win for employees on maternity leave

Save as you earn win for employees on maternity leave

Chancellor Philip Hammond included provisions to increase the Sharesave contribution ‘holiday’ period from six months to 12 months in today’s (22 November) Budget.

Sharesave or Save As You Earn is a tax-advantaged all-employee share scheme.

Employees may save up to £500 per month deducted from net pay via their employer’s payroll, over a three or five-year term.

When they start saving, they are granted an option over their employer’s shares.

At the end of that term, they may take their savings back or use them to buy shares under the option that was granted to them.

Under the old rules, only a six month break from monthly Sharesave contributions was permitted, despite the fact that employees are entitled to take a period of up to 12 months of maternity leave.

This meant that until now, many women who could not afford to keep their contributions going during maternity leave had to allow valuable Sharesave options to lapse, due to outdated legislation.

The new extended month contribution ‘holiday’ will allow all Sharesave participants to take a break from contributions of up to twelve months without their option lapsing.

They will be able to restart contributions on their return to work, and continue to participate in the scheme until its deferred maturity date.

Gabbi Stopp, head of employee share ownership at ProShare, said: "Millions of UK employees who are eligible to take part in their employers’ Sharesave schemes will now be able to participate without being effectively financially penalised for starting or adding to their family.

"This will help them build a meaningful stake in their employers’ shares, to save and invest for their futures and those of their families."