RSU's and UK tax

arobinson_2

I have recently started a new position which gives me access to RSU's as part of my package.

I've tried reading some articles on it from HMRC, but they make no sense what so ever! Can anyone help in explaining what the situation is regarding tax/NI deductions?

The wording on my contract states:

"We will request that the Board of Directors grant you <x number> restricted stock units (RSU’s), the right to receive shares of <company> stock in the future if the vesting conditions are met. The RSU’s will vest at the rate of 25% per year beginning on the first anniversary of the grant date."

My understanding is this means that I will get 25% every annum starting at my first year anniversary. However, I don't know if these are given to me as stocks, or as a cash value. Other problem is my company is US owned, as such virtually all of the information on it is based on the US taxation system!

Daniel54

arobinson wrote: »

I have recently started a new position which gives me access to RSU's as part of my package.

I've tried reading some articles on it from HMRC, but they make no sense what so ever! Can anyone help in explaining what the situation is regarding tax/NI deductions?

The wording on my contract states:

"We will request that the Board of Directors grant you <x number> restricted stock units (RSU’s), the right to receive shares of <company> stock in the future if the vesting conditions are met. The RSU’s will vest at the rate of 25% per year beginning on the first anniversary of the grant date."

My understanding is this means that I will get 25% every annum starting at my first year anniversary. However, I don't know if these are given to me as stocks, or as a cash value. Other problem is my company is US owned, as such virtually all of the information on it is based on the US taxation system!

I work in the UK for a NYSE quoted company and have received RSUs.The exact terms of your scheme may differ and you should ask your employer for details.However in general,this is how it works

You will be granted RSUs and will be required to accept the terms of the grant.This will usually state that you will forfeit unvested RSUs if you are dismissed or leave the company voluntarily ( other than for retirement)

The shares will most likely be held on an online platform ( my company uses Fidelity Netbenefits)

Let's say you are granted 200 RSUs on 31.12 .14.From your OP these will vest( become yours) in equal instalments over the next four anniversary dates -so 50 shares on 31.12 15,then 50 shares on 31.12 16 etc

the RSUs are subject to NI and income tax at your marginal rate on their value at the time they vest.You can either choose to pay the tax yourself and receive all the shares,but most people will opt to have shares deducted to pay for these deductions.So if you are a higher rate tax payer you will be due to pay 42% tax and NI which would mean your 50 shares would be netted down to 29 shares,which are then yours to keep or sell as you like.

I would expect that the gross income and tax paid will be dealt with in your UK payroll.If so,there should be nothing additional to declare to HMRC.

In our scheme we receive through payroll the dividends due on unvested RSUs

Hope this helps but do ask if anything I have said remains unclear.Again,do check the terms of your scheme but you should work on the basis that tax and NI will be payable as set out above

arobinson_2

Thanks!

Do you know if they are also eligible for student loan and pension deductions?

Daniel54

They are classed as non pensionable income,so there should be no automatic deduction,although they can be a handy way of boosting your pension and getting back the tax you have paid on them.

I don't know enough about the terms of your student loan to have a view on that I'm afraid

Hope this helps