ACCA Advanced Taxation (ATX) Practice Exam

What is the maximum monthly value allowed for participation in the SAYE scheme?

1. £300

2. £500

3. £800

4. £1,000

The correct answer is: £500

The maximum monthly contribution allowed for participation in the Save As You Earn (SAYE) scheme is £500. The SAYE scheme is a government-backed savings scheme offered by employers that allows employees to save a specific amount each month for a designated period, usually three to five years. At the end of the savings period, employees are given the option to purchase shares at a predetermined price, which is often substantially lower than the market value at the time of purchase. The £500 limit is designed to make the scheme accessible while also encouraging employees to save without overburdening them financially. This contribution limit ensures that employees can plan their savings effectively and provides a straightforward way for them to accumulate savings for future investment in company shares. This feature enhances employee ownership and engagement with the company. Other amounts like £300, £800, or £1,000 exceed the amount established by the regulations, making them ineligible for the SAYE scheme. By adhering to the maximum contribution allowance, participants can benefit from tax advantages associated with the scheme, thereby making the £500 limit crucial for eligible participation.