Income tax and National Insurance

We take your chosen amount from your pay before tax has been paid, so you’ll save income tax and National Insurance on your monthly amount.

If you choose to receive dividends as cash, these are subject to tax. If you choose to receive them as extra shares, you can’t sell them for three years but after that they’re tax-free.

If you sell partnership shares before you’ve held them for five years, you’ll need to pay income tax and National Insurance. This will be automatically taken off your sale amount. Once you’ve held them for five years, there’s no tax to pay.

If joining Buy As You Earn takes your earnings below the Lower Earnings Limit for National Insurance, this could affect your entitlement to social security benefits. You can find more information on the HMRC website or by contacting your local tax office.

We’re giving you the tax information above to help you make your own decisions. It’s not advice. It’s based on our understanding of current tax rules, but these might change. Remember that tax depends on your individual situation – if you’re not sure you should seek professional advice.