Legitimacy of plc’s, self employment incentive schemes plus accruing a bit more than the minimum wage.
Under share save, a company offers its employees the right (known as the option) to buy shares in the company at a future date. The option may be granted at a discount of up to 20% of the current share price. The employee then chooses to save between £5 and £250 per month out of their net pay over a three, five or seven year term (a 3 or 5 year savings contract- under the seven year scheme, an employee contributes for five years and accrues interest for a further two)
When the contract matures, a tax free bonus is received. The employee can then choose either to exercise the option to buy the shares with the proceeds from the savings contract, or just to take the proceeds and the bonus. The bonuses are equivalent to fixed rate interest and are set by the Treasury. The savings and bonus are free from income tax. However, an employee may have to pay Capital Gains Tax (CGT) if they sell their shares and make a profit which takes them above the CGT exemption limit for that year.
Companies must offer share save to all employees who meet the eligibility criteria, which often include a requirement of up to five years’ continuous employment.