Reducing tax on shares vesting

Ricky_Rooney

Hi all,
Next March a large portion of shares that were in a Long Term Incentive program will vest. Will these count as income and subject to income tax (which will push me into the additional rate tax bracket) or would it be capital gains that I would be liable for? These were all restricted stock units so I didn't purchase them as such so not sure if capital gains tax would be levied on the full amount or the price difference between when I was awarded them and the final strike price (which is likely to be ~35% higher). Really appreciate any guidance here. Thanks!

More_complicated_than_that

Ricky_Rooney said:

Hi all,
Next March a large portion of shares that were in a Long Term Incentive program will vest. Will these count as income and subject to income tax (which will push me into the additional rate tax bracket) or would it be capital gains that I would be liable for? These were all restricted stock units so I didn't purchase them as such so not sure if capital gains tax would be levied on the full amount or the price difference between when I was awarded them and the final strike price (which is likely to be ~35% higher). Really appreciate any guidance here. Thanks!

PAYE/NIC on full amount. If you are unlucky, you will also have to pay employer's NIC (with income tax relief on it).  Student loan repayments on it too.

Other than forfeiting them (e.g. as a bad leaver) or dying before vesting, you are stuck with the income tax charge.  If you leave the UK before vesting, you will pay PAYE/NIC on a proportion of value on vesting (plus any overseas tax).  That proportion will normally be time-based but can be different if there are performance conditions that have a different performance to the time-based vesting conditions it may be a bit different (and there can be some differences depending on how the RSUs are structured and the DTA concerned).

You can make extra gift aid contributions / pension contributions to reduce the tax in the normal way.

CGT on any growth post-vesting when the shares are sold.