Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Thu, 10 Nov 2022 23:35:37 GMT by StockOptions821485
Greetings. Could you help me, please? I am providing below an example. It is not a theoretical/hypothetical example, it is based on a real event, but I change some details (like dates) for anonymity. 1st of February 2021 – a grant date for 1,000 restricted share units (RSUs) for an employee with a UK company (the employer). 1st of February 2022 – a vesting date for those 1,000 RSUs; the price per share is £50. The distribution does not happen due to a blackout period with the employer. 1st of May 2022 – the employee accepts the grant (the grant was not accepted before). 1st of June 2022 – the blackout period finished. The price per share is £1. On the same day (and maybe in the next few days) the distribution happens, enough shares are sold (as arranged by the employer) to cover taxes that are calculated at the price of the distribution (i.e. the price of £1 per share). The employee can do what they want with the remaining shares (to keep them or to sell). The employer would report taxes to HMRC (and pay them). What is the taxable event in this case? Is it the vesting or the distribution? Generally, it seems on Internet it says that the taxable event is vesting for RSUs, however, is it the case in the scenario above? The employee couldn’t do much with the shares until after the distribution. There was a restriction due to the blackout that did not allow the employee to do much. Should the taxable event be the distribution? (Like, with stock options, the tax is due with an exercise not with vesting, as far as I can tell.) The difference in taxes for the employee can be very different. In the example above, assuming tax rate of 40%, it can be £20,000 - £400 = £19,600.
Posted Tue, 15 Nov 2022 11:40:20 GMT by HMRC Admin 17

Hi,
 
Please refer to guidance at :

Shares and Capital Gains Tax (Self Assessment helpsheet HS284)    .


Thank you.
Posted Tue, 15 Nov 2022 21:44:22 GMT by StockOptions821485
Thank you for your message. The link you shared is about Capital Gains Tax, as far as I understand. I am sorry, my question is about tax on 'income' (income tax and and national insurance), not about Capital Gains Tax. Could you help me regarding that, please? (The example above is simplified, but I think it has all necessary information for asking for advice.)
Posted Fri, 18 Nov 2022 13:59:31 GMT by
Hi StockOptions821485,

We cannot comment on any form of calculation/example/scenario, whether fact or fiction.

We can only point you the direction of the guidance, so that you can make an informed decision.

If, after that you still need advice, you need to employ the services of a financial adviser.  

Please have a look at the guidance on capital gains, separation and divorce.

Capital Gains Tax: separation and divorce

Thank you. 


 
Posted Sun, 20 Nov 2022 20:43:48 GMT by StockOptions821485
Thank you. As per my previous message, my question is about tax on 'income' (income tax and national insurance), not Capital Gains Tax. You sent me guidance on Capital Gains Tax, for separation and divorce. I am sorry, I am not sure how separation and divorce is relevant. Could you help me in regard to tax on 'income' for this, please? (Not for Capital Gains Tax.)
Posted Tue, 22 Nov 2022 14:36:40 GMT by HMRC Admin 17

Hi,
 
We cannot comment on any form of calculation, whether fact or fiction.

Thank you.
Posted Wed, 30 Nov 2022 00:04:12 GMT by StockOptions821485
Hello. Thank you for your reply. I am not seeking advice regarding exact calculation in this thread. Might it be helpful if I ask differently? What is a taxable event (for income tax and national insurance) for restricted stock units, if the grant acceptance by an employee happens after the vesting date, and also the distribution happens after the vesting (and the grant acceptance) as described in my original message in this thread: i.e., like, the distribution does not happen at the vesting due to a blackout period with the employer; the blackout period finished later, and on the same day as the blackout period ends (or maybe in the next few days) the distribution happens, enough shares are sold (as arranged by the employer) to cover taxes that are calculated at the price of the distribution; then the employee can do what they want with the remaining shares (to keep them or to sell); and the employer would report taxes to HMRC (and pay them); (the employee couldn't do much with the shares until after the distribution; there was a restriction due to the blackout that did not allow the employee to do much) ? Could you help me with that, please? (The guidance that was provided earlier in this thread (for Capital Gains Tax; and then for Capital Gains Tax, separation and divorce) is not applicable, as far as I can tell.)
Posted Fri, 02 Dec 2022 13:37:08 GMT by HMRC Admin 32
Hi,

You can find guidance here:

ERSM20192 - Employment-related securities and options: what are securities: Long Term Incentive Plan (LTIP)

Thank you.

You must be signed in to post in this forum.