How RSU affect UC

kimwp

Do you have access to the 24k shares?

mikailman

kimwp said:

Do you have access to the 24k shares?

No. I can see them in my account, they are distributed/vested, but I cant sell them until next two months because of sort of 'lock up period'.

mikailman

I could have sold all 30k shares but I sold only 6k. 

kaMelo

Just having a rethink on this as to whether they should be classed as capital because they are paid out via salary and subject to PAYE rather than CGT.

 I'm now wondering if they should actually be classed as income and if so, what type of income, and how to account for  the value of available shares that are unsold.

mikailman

The 30k share which I obtained, this is categorized as *Notional RSU* (shown, not paid). This is AFTER TAX. They already took away 21K tax in the payslip as net settle RSU. 

So from this 30k, I sold 6k and the remaining remains. 

I am not sure how much capital I should report to UC. Is it 30k, or 6k? 

kaMelo

 I'd hang fire a bit and ignore my first reply as it was incorrect . Doing some digging does appear to show they're classed as income and not capital.

 I don't have time now to research more but maybe others have some suggestions.

mikailman

Ok, if its not regarded as capital, then it must be regarded as surplus earning, am I right?

kaMelo

No, the surplus earnings rule is about having large enough earnings in an assessment period to zero a UC award and still have more than £2500 of income left over. 

I think the problem here is that most of the information regarding RSU (or phantom shares) is in relation tax liabilities of high earners with six figure salaries rather than how they interact with someone claiming a means tested benefit. Anyway I came across this post about how Tax Credits treated RSU's after vesting as income, which led me to believe they would possibly/probably be treated the same way on UC.
https://www.rightsnet.org.uk/forums/viewthread/14398/

Then I kind of went down a rabbit hole reading about tax liabilities of RSU's, income tax, NI (both employee's and employers) and if not disposed of immediately after vesting, potentially capital gains tax too.  On the subject of taxes I hope your employer is a UK one, But that was just melting my brain reading that lot and not actually what you've asked about so changed tack.

Then I did a search on here and came up with this thread within which @Yamor provided some great information;
https://forums.moneysavingexpert.com/discussion/6497064/universal-credit-and-rsus-stock

Hopefully this helps somewhat.

marcia_

mikailman said:

The 30k share which I obtained, this is categorized as *Notional RSU* (shown, not paid). This is AFTER TAX. They already took away 21K tax in the payslip as net settle RSU. 

So from this 30k, I sold 6k and the remaining remains. 

I am not sure how much capital I should report to UC. Is it 30k, or 6k? 

 You declare the full amount regardless of if it is locked in.
 That is the amount you have and the decision maker will asses if it's capital income or can be ignored. 

mikailman

UC considered the 30k as surplus earning. 

As I sold some shares, not all, how should I report it? Savings 6k and Capital 24k? 

And how the earnings will be converted into capital/savings?