Save as you earn schemes
Employees can be awarded shares in their employers company through save as you earn schemes. These schemes allow employees to save up to £ 500 a month for a contracted period, usually 3 to 5 years and at the end of that period the employee can buy their company’s shares at a price fixed at the outset of the scheme. No taxation will be due on the difference between the price paid for the shares and their current market value.
Share Incentive plans
SIPs allow employees to receive free shares in their company up to a value of £ 3,600 in a single tax year. The employee can also buy shares from their salary(up to £ 1,800 or 10% of their salary); the employers can then match those purchased shares with up to 2 free shares for every one purchased by the employee.
Using your SAYE or SIPs shares to subscribe to your ISA Account
When you receive shares in your employers company, those shares can be used to subscribe to your ISA account. Those shares essentially replace cash as the asset you are using to make that subscription.
When you choose to make such a subscription, the shares you have received will need to be transferred in-specie into your ISA account. The current market value(not the amount you paid) of those shares at the date they are transferred into the ISA account will determine how much of your yearly ISA allowance is being used. For example if your shares are valued at £ 18,000 on the day they are transferred into your ISA account, then you are deemed to have made a subscription of £ 18,000 and will have only £ 2,000 of your yearly ISA allowance remaining.
Limitations
SAYE and SIPs subscriptions can only be done up to 90 days after you receive those shares. If the value of your shares is greater than your remaining ISA allowance, then you will not be able to transfer all those shares into your ISA account.
Finally, it should be noted that whilst the ISA regulations allow subscriptions of this type, your ISA provider is under no obligation to provide this service. Hence you should check with your ISA provider before considering using your shares for this purpose.