The change, which will "allow employees on maternity and parental leave to continue saving into the scheme", will take effect from 6 April 2018. It will be accompanied by new guidance from HM Revenue and Customs (HMRC), the government said.
SAYE, also known as Sharesave, is a type of 'all employee' tax-advantaged share scheme which allows employees to build up and ultimately benefit from a financial stake in their employing company. Employees who join a SAYE scheme have money deducted from their pay after income tax and national insurance each month over the life of the scheme, which is usually three or five years. This money is then used to buy shares in the company at a discounted price.
Proshare, an industry body, had lobbied the government for the change in the rules, on the grounds that the old regime meant those that chose to take more than six months' maternity or parental leave were often forced to give up their SAYE options as they could not afford to continue to contribute to the scheme while on leave. Employees who take advantage of the 12-month holiday will be able to re-start contributions once they return to work, and will be able to continue to save until the scheme reaches its deferred maturity date.
Share plans and incentives expert Graeme Standen of Pinsent Masons, the law firm behind Out-Law.com, welcomed the proposed change.
"The limit of six missed monthly contributions is not imposed by the SAYE legislation, but in the mandatory terms – the 'prospectus' – of the SAYE savings contracts, which are specified by HMRC order," he said. "The specification is changed from time to time, most often as a result of altered 'bonus' rates – effectively, interest on completed savings."
"The change to increase the limit to 12 missed monthly contributions, but only for those on maternity or parental leave, is likely to be made by specifying an amended savings prospectus, which would not require any statutory amendments. The budget document does not explain this in detail, however, referring only to expected HMRC guidance," he said.
Companies should review the rules of their SAYE schemes to see whether they needed to be amended as a consequence of the change, Standen said.
"This might catch people out if there are no related statutory amendments," he said.