Self Assesment dividends and vested RSUs

FinanciallyUneducated88

I'm completing a Self Assessment Tax Return for the first time and I am unsure if:

1. I need to input the value of vested RSUs for the tax year
2. Where to input them on the form
3. How to input them (historical USD to GBP forex rate)

1. I had two RSU vesting periods in the prior tax year which brought my total taxable income above £100k, resulting in my need to complete a self assessment tax return. Do I need to state this taxable income (vested RSUs) on my tax return? Google tells me that RSUs don't provide dividends.

2. I pressume the section of the tax return form to input this portion of income is on the Dividends page in the section titled 'Other Dividends'. Is this correct?
The section tited 'Dividends from UK companies' says do not include stock dividends, hence my pressumtion to use the section 'Other Dividends' to delcare the value of my vested RSUs.

3. I'm a UK worked employed by a UK company, but my RSUs are granted by the parent US arm of the company, hence are all dealt with in USD initially. My RSUs vested at two separate time periods (different dates). Does this mean I need to take the historical USD to GBP conversion rate that existed on the vesting date so I can input the correct GBP amount on the tax return?

EdSwippet

RSUs are effectively just a bonus that is paid in stock, rather than in cash. When they vest, their value is (or at least, should be) treated by your employer as salary, so subject to UK PAYE tax and NI withholding. (Some employers also charge employer's NI to employees on options and perhaps also RSUs, but not all.)

Given this, the value of the shares you received when you received them, and the tax withheld, should normally appear already on your payslips, your annual P60, and so on. In which case, you just enter your P60 details into self-assessment, and everything will fall out from there as it should. Note that any PAYE withholding on your RSUs very likely won't (and perhaps can't, realistically) take account of your crossing the £100k threshold and into the nasty 60% tax band at £100k-£125k, so even though your employer withheld tax on these RSUs, you may still have more to pay.

RSUs themselves don't pay dividends, but after vesting, the shares that they turn into may. In that case, you then enter these dividends into your self-assessment return. For US stocks, these would be foreign dividends. The US will take 15% in tax on those dividends, provided your broker has a W-8BEN form on file for you, and you can claim a credit for this against UK tax on these same dividends. This can get complext, but a fair few US stocks, particularly tech, don't pay dividends, so you might not have to grapple with it.

Finally, you do want to use the USD/GBP rate(s) in effect when you received (and/or sold) the shares, dividends, and so on. For vesting in particular, if your employer put everything though PAYE then they will have effectively handled the forex rate aspect of this already. Otherwise, you can ask them for details.

In summary then: 1) yes, you do have to include the values of the vested RSUs somewhere on self-assessment, since they are effectively salary; 2) the value of the RSUs that vested goes down as salary, maybe already included in your P60; and 3) historical rates, if not already handled by your employer via PAYE or similar.

One final note. Once you cross into the spiteful 60% tax band, additional pension contributions become very worthwhile. Too late now to change the tax year already ended, but something to consider if this is likely to recur.

FinanciallyUneducated88

Thank you, that makes perfect sense; the value of the shares when Ireceived them, and the tax withheld, does appear already on my payslips, so is treated by my employer as salary. Which means as you've said, I just need to enter my P60 details into self-assessment, and everything will fall out from there as it should.

It looks like the stock my company issues don't pay dividends after vesting, so I won't need to worry about that.

Overall this makes my self-assessment return pretty damn easy, just entering my P60 info and done!

Regarding the 60% tax band, I am aware of the pension tax saving measures but opted for the past tax year as well as this tax year to take the personal allowance hit...