Employees participating in HMRC approved Sharesave schemes are required to save a certain amount from their net pay, normally monthly. The arrangement will normally include an entitlement to a bonus which is equal to a guaranteed number of monthly contributions. After the savings period, employees can use the money to buy shares in the employer or withdraw the total savings and tax free bonus. The bonus rates are set by the HMRC.
On 29 May 2009 HMRC introduced new Sharesave bonus rates. These new rates will apply to those joining Sharesave schemes on or after 29 May 2009. The new rates from 29 May 2009 are set out below and are at an all time historical low reflecting the all time low bank of England base rates.
- 3 year bonus = 0.3; equivalent interest rate = 0.54%;
- 5 year bonus = 2.2; equivalent interest rate = 1.42%;
- 7 year bonus = 5.2; equivalent interest rate = 1.84%;
- early closure interest = 0.36%.
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