RSUs from US company, Pension Salary Sacrifice, what do I tell HMRC?

sho_me_da_money

Hello MSE Forum,

Had a simple question for someone in the know.

UK Tax thresholds and amounts are as follows:

Personal Allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £150,000 40%

I work for a US company and earn about 69K per year. I salary sacrifice 2500 each month into my pension meaning my gross salary post sacrifice is about 39000.

Assuming I am awarded 10 RSUs for the entire year and the share price at the time of vesting is 2000 pounds per share unit. Thats a total gross reward of 20,000 pounds.

However, the US government sells 5 of my stocks to cover taxes therefore I receive the remaining 5 that are worth 10,000.

When I look at my P60 for last year, I see the total earnings for the year. It shows a total amount consisting of the amount earned post salary sacrifice BUT adds the gross RSU reward of £20,000. Why doesn't the P60 reflect the tax was already paid to/taken out by the US government. Shouldn't the P60 state £10,000, which is the amount I received after taxes were taken at the time of vesting?

I want to be crystal clear about my declaration to the HMRC as my gross annual taxable income for 2023. Is it:

69,000 (gross salary before salary sacrifice) + 20,000 (gross RSU reward before US tax) = 89,000
69,000 (gross salary before salary sacrifice) + 10,000 (gross RSU reward after US tax) = 79,000
39,000 (gross salary after salary sacrifice) + 20,000 (gross RSU reward before US tax) = 59,000
39,000 (gross salary after salary sacrifice) + 10,000 (gross RSU reward after US tax) = 49,000

I am confused by the RSUs. Please ignore any CGT scenarios. I am merely trying to inform the HMRC as what my gross annual taxable income is for this year to ensure:

1. I have the right tax code applied

2. I am paying the right amount of tax based on the thresholds mentioned in the outset of the message.

Thanks

Dazed_and_C0nfused

Are you basically suggesting your P60 is wrong?

If so you need to take this up with your employer as they prepare the P60 (which is no longer sent to HMRC).

If not then why wouldn't you just use the P60 figure?

sho_me_da_money

Im saying the P60 for 2022 is showing a total that includes the gross sum of RSUs. Is that right? The US already took my taxes at vesting.

sho_me_da_money

Closest similar query I found online was here but didn't understand any of it. I have never filled a self assessment. Any ideas?

https://community.hmrc.gov.uk/customerforums/sa/0db5594d-cf1f-ec11-b76a-00155d9c6b90

EdSwippet

Your US broker may be auto-selling for tax withholding, but are you certain that this is US tax withholding, and not UK tax+NI withholding? Assuming you are (a) not a US citizen or green card holder, and (b) sent your broker a W-8BEN form (or equivalent) affirming your non-US status, there should be no US tax withholding or US tax liability on RSU income. It's all treated as normal UK salary.

Search the forum for "RSU" and you should turn up some posts that describe how RSUs of US shares work for UK employees. For example: https://forums.moneysavingexpert.com/discussion/comment/73371141/#Comment_73371141

Otherwise, your employer should be able to answer your questions. They will certainly know the ins and outs of your RSU scheme better than a bunch of strangers on the internet might.

(For what it's worth, it looks to me like there is a fair bit of confusion and quite a few misleading statements in the HMRC community thread you linked to, with much of it apparently coming from HMRC themselves. Shrug.)

sho_me_da_money

EdSwippet said:

Your US broker may be auto-selling for tax withholding, but are you certain that this is US tax withholding, and not UK tax+NI withholding? Assuming you are (a) not a US citizen or green card holder, and (b) sent your broker a W-8BEN form (or equivalent) affirming your non-US status, there should be no US tax withholding or US tax liability on RSU income. It's all treated as normal UK salary.

Search the forum for "RSU" and you should turn up some posts that describe how RSUs of US shares work for UK employees. For example: https://forums.moneysavingexpert.com/discussion/comment/73371141/#Comment_73371141

Otherwise, your employer should be able to answer your questions. They will certainly know the ins and outs of your RSU scheme better than a bunch of strangers on the internet might.

(For what it's worth, it looks to me like there is a fair bit of confusion and quite a few misleading statements in the HMRC community thread you linked to, with much of it apparently coming from HMRC themselves. Shrug.)

Both of your assumptions are correct. I know this is going to sound super super dense but if I dont ask, I wont learn. What does "UK/US tax withholding mean" and how does this effect my situation as posted?

bostonerimus

Are you a UK citizen working in the UK for a US employer? Are you an employee or a contractor? Is your pension a US company pension?

Daniel54

sho_me_da_money said:

EdSwippet said:

Your US broker may be auto-selling for tax withholding, but are you certain that this is US tax withholding, and not UK tax+NI withholding? Assuming you are (a) not a US citizen or green card holder, and (b) sent your broker a W-8BEN form (or equivalent) affirming your non-US status, there should be no US tax withholding or US tax liability on RSU income. It's all treated as normal UK salary.

Search the forum for "RSU" and you should turn up some posts that describe how RSUs of US shares work for UK employees. For example: https://forums.moneysavingexpert.com/discussion/comment/73371141/#Comment_73371141

Otherwise, your employer should be able to answer your questions. They will certainly know the ins and outs of your RSU scheme better than a bunch of strangers on the internet might.

(For what it's worth, it looks to me like there is a fair bit of confusion and quite a few misleading statements in the HMRC community thread you linked to, with much of it apparently coming from HMRC themselves. Shrug.)

Both of your assumptions are correct. I know this is going to sound super super dense but if I dont ask, I wont learn. What does "UK/US tax withholding mean" and how does this effect my situation as posted?

It means that you do not have to pay US tax ( You have submitted your W8-BEN form ).So the shares sold by your US broker ( not by the US Government)holding the RSUs are to cover UK income tax and NI

I would expect you then to be in credited with the net amount in USD.In my case HR in the UK would then convert this into a sterling amount and include the relevant figures both in a pay slip ( gross,deductions ,net) and then into my P60

So my P60 included the gross amount from the vested RSUs,but also the tax/NI deductions created by the selling of a relevant percentage of the shares

Are you sure the relevant RSU deductions are not included in your P60 ? 

If you are not sure then check with HR in case they have got it wrong

sho_me_da_money

Daniel54 said:

sho_me_da_money said:

EdSwippet said:

Your US broker may be auto-selling for tax withholding, but are you certain that this is US tax withholding, and not UK tax+NI withholding? Assuming you are (a) not a US citizen or green card holder, and (b) sent your broker a W-8BEN form (or equivalent) affirming your non-US status, there should be no US tax withholding or US tax liability on RSU income. It's all treated as normal UK salary.

Search the forum for "RSU" and you should turn up some posts that describe how RSUs of US shares work for UK employees. For example: https://forums.moneysavingexpert.com/discussion/comment/73371141/#Comment_73371141

Otherwise, your employer should be able to answer your questions. They will certainly know the ins and outs of your RSU scheme better than a bunch of strangers on the internet might.

(For what it's worth, it looks to me like there is a fair bit of confusion and quite a few misleading statements in the HMRC community thread you linked to, with much of it apparently coming from HMRC themselves. Shrug.)

Both of your assumptions are correct. I know this is going to sound super super dense but if I dont ask, I wont learn. What does "UK/US tax withholding mean" and how does this effect my situation as posted?

It means that you do not have to pay US tax ( You have submitted your W8-BEN form ).So the shares sold by your US broker ( not by the US Government)holding the RSUs are to cover UK income tax and NI

I would expect you then to be in credited with the net amount in USD.In my case HR in the UK would then convert this into a sterling amount and include the relevant figures both in a pay slip ( gross,deductions ,net) and then into my P60

So my P60 included the gross amount from the vested RSUs,but also the tax/NI deductions created by the selling of a relevant percentage of the shares

Are you sure the relevant RSU deductions are not included in your P60 ? 

If you are not sure then check with HR in case they have got it wrong

You sir are correct:




RSU gross release value upon vesting

22 November 2021 $32470.74
21st May 2021 $35334.74
The total amount above is equivalent to £53,856.89

Salary 2021

My Salary last year was £61,800 (this does not include the salary sacrifice amounts)

Confusion

How did they get to the £90935.85 figure?

Dazed_and_C0nfused

Salary sacrificed needs to be deducted.

That is you agreeing to a lower salary in return for your employer making additional employer pension contributions.

If you work through them one by one your payslips for 2021:22 should show how the amount has been arrived at.

sho_me_da_money

Found it on the HMRC website: