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RSU Vested Options and Tax
Options

michaels2411
Posts: 20 Forumite

in Cutting tax
Hi there,
I'm just looking for some clarification please. I work for a US company and have gained some RSU share options which have been vested for some time, but I have not exercised them.
These were granted to me at a price of $3 they are now worth $43. I'm a higher rate income tax payer and just looking to keep the tax burden down as much as possible when exercising these options.
Am I right in thinking that when I exercise these options I should exercise and HOLD, keep these for over 12 months so the gains ($40 per share) are treated as CGT as opposed to Income tax? If I sell straight away I believe I incur income tax against the gain.
Furthermore would the best strategy thereafter be to sell in blocks which equate to less than one's yearly CGT limit currently set at £11700 which will then see 20% tax seen as opposed to my income tax %?
If my understanding is totally off track then please feel free to correct me, any advice welcome.
Thanks!
I'm just looking for some clarification please. I work for a US company and have gained some RSU share options which have been vested for some time, but I have not exercised them.
These were granted to me at a price of $3 they are now worth $43. I'm a higher rate income tax payer and just looking to keep the tax burden down as much as possible when exercising these options.
Am I right in thinking that when I exercise these options I should exercise and HOLD, keep these for over 12 months so the gains ($40 per share) are treated as CGT as opposed to Income tax? If I sell straight away I believe I incur income tax against the gain.
Furthermore would the best strategy thereafter be to sell in blocks which equate to less than one's yearly CGT limit currently set at £11700 which will then see 20% tax seen as opposed to my income tax %?
If my understanding is totally off track then please feel free to correct me, any advice welcome.
Thanks!
0
Comments
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Normally, with US employers, a UK employee incurs an Income Tax liability when the RSUs vest and there's nothing you can do about that. The UK Income Tax liability is based on your "profit" , the difference between what you paid and the open market value of what you received. On this forum there have been some really good contributions from posters with a better understanding than me so I suggest that you use the search facility.
On the Cutting Tax home page, if you type RSU into the search box and hit "Go" you will find 16 threads (including your own). Spend a bit of time looking at all of them but I would suggest you concentrate on anything posted by EdSwippet. Another possible search term is "Fidelity", which seems to be the broker most commonly used for these types of schemes.0 -
michaels2411 wrote: »I work for a US company and have gained some RSU share options which have been vested for some time, but I have not exercised them.
Can you clarify here? It's not clear from the above which you have. With both, you pay income tax and NI on the immediate gain when you take ownership, and then later capital gains tax only when you sell.michaels2411 wrote: »Am I right in thinking that when I exercise these options I should exercise and HOLD, keep these for over 12 months so the gains ($40 per share) are treated as CGT as opposed to Income tax? If I sell straight away I believe I incur income tax against the gain.michaels2411 wrote: »Furthermore would the best strategy thereafter be to sell in blocks which equate to less than one's yearly CGT limit currently set at £11700 which will then see 20% tax seen as opposed to my income tax %?0 -
Thanks both for your replies, looked further into this and other threads and whilst I do have some options, it was the RSU's that were causing me headaches.
I had a 4 year vesting schedule and recieved RSU blocks at the start of each yeafr my payslip/P60 reflected these trenches of RSU's and therefore I paid Income Tax/NI on them.
My W8Ben form is filed and with the broker so I should I believe just be able to sell these RSU's as and when and fingers crossed not haver to pay Income tax/NI again.
Thanks though for your guidence. Alot of information I had read was relating to the US way of selling and holding to try to then incure CGT.0 -
Sadly me again, anyone able to clarify something for me?
I sold 240 RSU's recently these were taken from a pot that i'd already paid income tax here in the UK on and was on my payslip every January.
As I say I sold 240 of these now for $10,771.20 I then see two deductions in my US brokerage account, one is for $744 (for the exercise of the RSU) and the second for $4712.78 (this one is unknown to me).
I'm at a total loss why on earth I pay income tax on RSU's then I exercise them pay money to exercise then see this $4712.78 also get taken. Anyone able to clarify this up to me would be really welcome. Thanks.0 -
michaels2411 wrote: »I'm at a total loss why on earth I pay income tax on RSU's then I exercise them pay money to exercise then see this $4712.78 also get taken. Anyone able to clarify this up to me would be really welcome.0
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