Restricted Stock Units / Vesting / Tax

Zola.

I recently joined a company that has given me stocks as part of the joining.

It's a 4-year vesting, 1-year cliff deal... so I can get access to the full amount after 4 years of service, or a quarter after each year... 

I do plan to hold most of them long-term since the industry I am in is very hot at the moment and won't be going away any time soon..

However, should I wish to sell some, what tax implications are there?  On the date I was given them the share price was around $100, it's now around $120... do I pay tax on the share price gain when I sell, or how does it generally work? The current value of all stocks now is around $40,000.

george4064

Tax breaks depend on the specific details within the scheme booklet that you are participating in, have you had a thorough read through that? What does it say?

EdSwippet

Zola. said:

I recently joined a company that has given me stocks as part of the joining.
...
However, should I wish to sell some, what tax implications are there?  On the date I was given them the share price was around $100, it's now around $120... do I pay tax on the share price gain when I sell, or how does it generally work? The current value of all stocks now is around $40,000.

Assuming this is a standard RSU scheme, and not any form of UK tax-advantaged scheme (the probable case, since you give values in USD, suggesting you work for the UK office of a US corporation), you will pay income tax and NI on the full value of the shares when they vest, so exactly as if they were a cash bonus. You may also have to pay employer's NI (employers seem to vary on that), so you could lose well over 50% of the value to tax and NI.

After than, potentially capital gains tax on the change in value between their value at vesting and the proceeds from selling.

This article lays things out fairly well:

RSUs – A tech employee’s guide to restricted stock units (FrazerJames)

The one area this article doesn't cover is currency conversions. For your UK tax and NI you (or your employer) will have to use the values in GBP at the GBP/USD exchange rate at the time of these assorted events (vesting, sale). So there is an additional element of gain/loss due to currency effects here.