RSUs and gross salary

ro1892

How do vesting RSUs contribute to your gross salary calculation?

Let's assume that gross salary is £90,000 and I have £30,000 of RSUs vesting. As I understand it, this would end up with an effective gross salary of £120,000.

Would this change if the RSU scheme has the provision where the employee pays the employer's NIC on the RSUs? I understand that income tax payable on RSUs is taken after employer NIC (so id the employee pays the employer NIC does this mean the gross salary is £120,000 (£90,000 plus £30,000), or £115,485 (£90,000 plus £30,000 minus employer NIC at 15.05%: £4515).

EdSwippet

ro1892 said:

Would this change if the RSU scheme has the provision where the employee pays the employer's NIC on the RSUs? I understand that income tax payable on RSUs is taken after employer NIC (so id the employee pays the employer NIC does this mean the gross salary is £120,000 (£90,000 plus £30,000), or £115,485 (£90,000 plus £30,000 minus employer NIC at 15.05%: £4515).

The latter: £115,485. You deduct employers NI paid by you from taxable income. From HMRC:

ERSM170750 - PAYE & NICs: NICs elections & agreements

From 28 July 2000 there is a facility whereby

- the employer and employee can agree or jointly elect for the employee to meet the employer’s liability to pay secondary NICs on share option gains, and

- the employee can get a deduction equal to the amount of NICs transferred (as elected) when working out the amount chargeable to income tax. A deduction is not allowed when working out the charge to NICs.

This article contains a good worked example:

RSUs – A tech employee’s guide to restricted stock units - Fraser James

ro1892

Thank you.

I had read the link you posted but was a little confused: it states that you'd need to take the employer's NIC off before calculating income tax (which would imply that the gross income figure would have the employer NIC deducted on the RSU value) but the article made no mention of gross income explicitly so wanted to double check.