Investment matters. Smart guide #3 Getting your fair share

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1 Investment matters Smart guide #3 Getting your fair share Produced in partnership with Shares magazine The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance. Selftrade does not provide investment advice. If you are in any doubt as to the risk or suitability of an investment or product you should seek advice from an independent financial adviser.

2 Introduction As an investor, you know what your financial priorities are in life. The chance to buy shares in the company you work for at a bargain price is an enticing one that carries a unique opportunity for a potentially beneficial return on investment. Our Investment Matters Smart Guides have been created to give you the knowledge and confidence you need to make important investment decisions. Every investment plan needs to be built on solid foundations. This guide examines the opportunities that a Save As You Earn scheme can represent and addresses some of the common questions that scheme members often have.

3 Company shares - an overview Fifty percent of the respondents to a recent survey said they receive company shares as part of their employee benefits and regard them as an investment. An employee share scheme can be a tax efficient and lower-risk launchpad to creating a diversified portfolio, using the financial markets as a tool to achieve long-term financial goals. Investing in shares in your company is a long term option to prepare for all of those life goals that matter most.

4 Save As You Earn: Save As You Earn (SAYE or Sharesave) is a UK government-backed scheme launched in It allows company employees the opportunity to save money over a fixed period of time, with an option to buy shares in the company at the end of the period. The cash is typically deducted directly from your monthly pay and at the end of the saving period, the SAYE reaches maturity, enabling you to buy company shares at a discounted price that has been fixed at the outset. This is known as the option price and may be set at a discount rate of around 20% off the share price at the point the scheme started. If the share price falls to a level where they would be cheaper to buy in the market, you can still get your money back. In fact, you can cancel your plan and have your savings returned at any time. If you do cancel though, you permanently lose the opportunity to buy shares at the option price that was set at the start of the scheme. At the end of the period, if you exercise your option, the cash savings that you have accumulated over the term of the scheme are used to buy shares in the company you work for. From this point your investment is subject to the usual risks associated with share ownership.

5 Step by step - Transferring the SAYE into a Selftrade Shares ISA Shares purchased through an SAYE scheme can be transferred into an ISA. If you want to do so, you must request the transfer within 90 days of the shares release to avoid being liable for Capital Gains Tax. If you received a share certificate when you bought shares at the end of the scheme, you will need to open an ISA if you don t already have one. To transfer those shares to a Selftrade Shares ISA, you will need to submit your request with the following: 1 The share certificate(s) 2 A completed Crest Transfer Form The Notice of Exercise or Letter of Appropriation, which can be obtained from the administrator of the SAYE scheme. It must contain your name and address, reference the fact that the shares have come from a scheme, the number of shares involved and the date they were purchased. Additional points to be aware of: There is no charge for transferring matured SAYE shares into an ISA If your shares are held with a nominee account, you may need to complete other forms. Please contact us on Other types of tax advantaged share schemes: Share Incentive Plans (SIPs) allow you to buy shares from your gross salary, essentially giving higher rate taxpayers a 40% discount on these purchases. Typically you can invest a maximum of 1,800 or 10% of your salary (whichever is lowest) in a tax year. However, unlike a SAYE scheme, if the share price falls you could end up losing money. Shares have to be held for five years before the full tax advantages can be realised, but the good news is, you face no capital gains tax on the proceedings. Shares from a Share Incentive Plan can also be transferred into a stocks and shares ISA within 90 days. Company Share Option Plans typically used on a discretionary basis to senior staff in a company. Employers can give up to 30,000 worth of shares, which the employee can buy at the option price after three years, without creating an incometax liability.

6 Diversification A crucial principle of investing is diversification. There is a risk of putting all of your investments in just one company - if you just focus on one or two holdings, the impact of market volatility could reduce its value. By spreading risk then the overall portfolio potential will be greater. There are many ways you can diversify your investments, and as you develop your own investment portfolio you may want to consider: It may make sense to sell at least a portion of your SAYE shares and reinvest the proceeds elsewhere. A Selftrade Shares ISA enables you to trade in UK and international shares to help reduce the risk of equity investment through diversification. Exchange-traded funds (ETFs) are also a good way of diversifying even if you do not have large sums of money at your disposal. If you are uncertain as to what action to take you should seek advice from an independent financial adviser.

7 Implications for early leavers The implications for anyone leaving a scheme before they mature or reach the end of the scheme period vary between schemes and on the circumstances. Your reason for leaving a company will impact what happens to your SAYE but you should always get back the cash value of what you have saved. If you resigned within three years of the start date, you may lose the right to buy shares at the scheme s option price, but if you leave due to retirement or redundancy, you may retain this privilege. When it comes to Share Incentive Plans, if the shares are withdrawn early, other than in the statutory good leaver circumstances of injury, retirement or redundancy, then you will be liable for tax. It may make sense for Share Incentive Plan participants to gradually move shares from their incentive plan into an ISA as they approach retirement age to more effectively manage their tax position. If you are uncertain as to what you should do in these circumstances, then you should seek advice from an independent financial adviser.

8 Take control of your investments with Selftrade Whether you have lump sums to invest or prefer to invest smaller sums regularly, Selftrade can help you to take control of your own financial future. Depending on your objectives you can choose to have one or more of a Shares ISA, a SIPP dealing account or a standard dealing account with Selftrade, ensuring you have access to tax-efficient investment schemes as well as unlimited trading potential. All of our products give you access to our reliable and easy to use investment platform, with over 8,000 UK and international shares, bonds and Gilts, funds from the world s leading investment managers, and derivatives for the more advanced investor. Services such as Dividend Reinvestment and Limit and Stop Loss orders make it as easy as possible to trade the way you want to without becoming a full time investor. And our mobile trading apps give you access to share trading on the move. If you can connect to us, we can connect you to the markets. Visit to find out how you can enjoy a greater sense of choice and control over the investment decisions you make. Contact Us Customer Services Telephone: (or from overseas) Lines are open 7:45 am to 7:00 pm Monday to Friday Telephone trading is available from 8:00 am to 4:30 pm us at: info@selftrade.co.uk or visit the website at Selftrade is a trading name licensed to Equiniti Financial Services Limited. Equiniti Financial Services Limited is part of the Equiniti Group. Their registered office is Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA. Investment and general insurance services are provided through Equiniti Financial Services Limited, which is registered in England & Wales with No and is authorised and regulated by the UK Financial Conduct Authority. Equiniti Financial Services Limited is a member firm of the London Stock Exchange.