How RSU affect UC

mikailman

Hi, 

I have got some RSU vested (£50k) this month. After tax its roughly (£30k) and I sold some share (£6k) last month. 

In my payslip of this month, this RSU vest has been added as taxable income and the tax has been adjusted accordingly. 

The take home pay for this 'special' month is slightly higher than normal regular, because after the tax adjustment, the net income didn’t change much. 

So I have roughly £6k in my bank account, £24k as unsold stock in my stock plan and my take home pay is around £3k after tax, NI and pension. 

I am not sure how this is gonna affect the UC claim? 

Is the £24k worth share gonna be considered as capital?

Also, in my HMRC tax account, the last months taxable income was unusually high because £50k was vested. 

In reality I get my salary and £6k cash which is at my disposal. The £24k share I cant sell anytime on my own because of some restriction. 

How to figure this out?

marcia_

mikailman said:

Hi, 

I have got some RSU vested (£50k) this month. After tax its roughly (£30k) and I sold some share (£6k) last month. 

In my payslip of this month, this RSU vest has been added as taxable income and the tax has been adjusted accordingly. 

The take home pay for this 'special' month is slightly higher than normal regular, because after the tax adjustment, the net income didn’t change much. 

So I have roughly £6k in my bank account, £24k as unsold stock in my stock plan and my take home pay is around £3k after tax, NI and pension. 

I am not sure how this is gonna affect the UC claim? 

Is the £24k worth share gonna be considered as capital?

Also, in my HMRC tax account, the last months taxable income was unusually high because £50k was vested. 

In reality I get my salary and £6k cash which is at my disposal. The £24k share I cant sell anytime on my own because of some restriction. 

How to figure this out?

 If you have more than £16k in capital you are not entitled to UC. This doesn't include money in pensions. 

kaMelo

As above, any RSU shares past their vesting period are now capital that you should declare in total, not just the value of what you have sold.

If the total value of shares that you can now access is £30,000 then this will exclude you from any means tested benefits.

Deleted as it is incorrect information.

mikailman

kaMelo said:

As above, any RSU shares past their vesting period are now capital that you should declare in total, not just the value of what you have sold.

If the total value of shares that you can now access is £30,000 then this will exclude you from any means tested benefits.

I see. 

This means as long as I have capital more than £16k, I am not eligible to claim UC, right? 

This puts me in a very inconvenient situation as I am quite dependent on the UC benefits and now I have to use the sell the share and cash it until the capital reduces to less than £16k. 

Is there any way I can keep getting the benefits and while make a good use of the capital I have?

poppy12345

mikailman said:

kaMelo said:

As above, any RSU shares past their vesting period are now capital that you should declare in total, not just the value of what you have sold.

If the total value of shares that you can now access is £30,000 then this will exclude you from any means tested benefits.

I see. 

This means as long as I have capital more than £16k, I am not eligible to claim UC, right? 

This puts me in a very inconvenient situation as I am quite dependent on the UC benefits and now I have to use the sell the share and cash it until the capital reduces to less than £16k. 

Is there any way I can keep getting the benefits and while make a good use of the capital I have?

More than £16,000 means no entitlement to any means tested benefits, including UC. You must report the changes. Paying off debt is allowed when claiming UC and will not be considered as deprivation of capital. Other than that there's no other way to continue with your UC entitlement. 

peteuk

Did you transition from Tax credits to Universal credit?  If so you will have been given a yrs transition protection so your capital will have been ignored for the first year. 

If you didn't then you will be expected to live off the capital you have until its under £16K and as a side issue you are likely to be in arrears of UC  from the point you had over £16K capital. 

Spoonie_Turtle

peteuk said:

Did you transition from Tax credits to Universal credit?  If so you will have been given a yrs transition protection so your capital will have been ignored for the first year. 

If you didn't then you will be expected to live off the capital you have until its under £16K and as a side issue you are likely to be in arrears of UC  from the point you had over £16K capital. 

Only if they already had the capital over £16k at the time of making the UC claim.  People migrating from TC who didn't have capital over the threshold to disregard are subject to the normal UC rules about it.

peteuk

Spoonie_Turtle said:

peteuk said:

Did you transition from Tax credits to Universal credit?  If so you will have been given a yrs transition protection so your capital will have been ignored for the first year. 

If you didn't then you will be expected to live off the capital you have until its under £16K and as a side issue you are likely to be in arrears of UC  from the point you had over £16K capital. 

Only if they already had the capital over £16k at the time of making the UC claim.  People migrating from TC who didn't have capital over the threshold to disregard are subject to the normal UC rules about it.

I assumed that the situation hasn't changed in the last year so therefore if they transitioned within this time frame, they would have had over £16K.  

mikailman

I transitioned 4 years ago from Tax credit to UC. 

What I understand is my UC claim will be closed next month. What if I manage to invest the savings into a business or a company I create, then after investing the money, (lets say I invest 20k and I have 10k left), then will I be able to claim UC again?

marcia_

mikailman said:

I transitioned 4 years ago from Tax credit to UC. 

What I understand is my UC claim will be closed next month. What if I manage to invest the savings into a business or a company I create, then after investing the money, (lets say I invest 20k and I have 10k left), then will I be able to claim UC again?

 No because your investments count as capital 

poppy12345

mikailman said:

I transitioned 4 years ago from Tax credit to UC. 

What I understand is my UC claim will be closed next month. What if I manage to invest the savings into a business or a company I create, then after investing the money, (lets say I invest 20k and I have 10k left), then will I be able to claim UC again?

If you have more than £16,000 capital now then you must report it. If on the last day of your assessment period you still have that capital then your UC will end. If you spend the money in the meantime then UC will very likely ask what you did with it by asking for bank statements.