What does paragraph 29 of Schedule 3 ITEPA 2003 require for SAYE option schemes?

Paragraph 29 requires that share options granted under a Save As You Earn (SAYE) option scheme must be non-transferable. The scheme rules must enforce this restriction, meaning a participant cannot sell, assign, gift or otherwise pass their options to another person. This is a fundamental requirement for the scheme to qualify for tax-advantaged status.

Can a participant transfer their SAYE share options to a family member?

No, a participant cannot transfer SAYE share options to a family member or anyone else. The options are personal to the employee who received them. The scheme rules must prevent any transfer, sale, assignment or gift of the options. Only the participant who was granted the options may hold and exercise them during their lifetime.

What happens to SAYE share options when a participant dies?

The death of a participant is the sole exception to the non-transferability rule. When a participant dies, paragraph 32 of Schedule 3 provides separate provisions allowing the deceased participant's personal representatives to exercise the share options on behalf of the estate. During the participant's lifetime, only they may hold and exercise the options.

Why must SAYE share options be non-transferable under United Kingdom law?

Non-transferability is a fundamental requirement for a SAYE option scheme to qualify for tax-advantaged status under United Kingdom law. By ensuring options remain personal to the employee, the legislation prevents the tax benefits associated with the scheme from being passed to third parties who are not participating employees.

Income Tax (Earnings and Pensions) Act 2003 Schedule 3 paragraph 29

Share options must not be transferable

Paragraph 29 requires that share options granted under a SAYE option scheme cannot be transferred by the participant to anyone else.

Share options granted under the scheme must be non-transferable by the participant
The scheme rules themselves must enforce this restriction
This means a participant cannot sell, gift or otherwise pass their options to another person
The only exception is on the death of the participant, where paragraph 32 provides for the exercise of options

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