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Posted Sun, 31 Dec 2023 15:35:45 GMT by ukresi
Hi My employer is in the UK whose parent company is based and listed (on the stock exchange) in the US. I was awarded shares in prior year from the American parent that vested in tax year 2022-23 as part of the Deferred Stock Unit (DSU) awards which I have sold in the same tax year. My UK payslip shows the GBP equivalent of the of the total vested shares (incl. shares that were held for witholding tax in the US) under 'Earnings' section (also reflected in the P60 under Total Pay for the year), whilst the 'Deductions' side of the payslip includes both the UK income tax (on the total vested shares) plus the GBP equivalent of the US withholding tax (shown as DSU tax) in calculating the net pay. However, P60 under 'Total Tax deducted' only includes UK income tax and does not include the US withholding tax. My question is how do I reflect this in my online self assessment. Do I need to complete the foreign income section? Can I claim credit for the US witholding tax? Thanks!
Posted Tue, 09 Jan 2024 15:15:19 GMT by HMRC Admin 5

Income from share options would fall under Article 14 of the UK/USA DTA – see page 47 of the UK/USA DTA.
In these share option scenarios under Article 14 the UK usually has sole taxing rights and an IRS form W8-BEN would have been completed to confirm this to the IRS.
Any US tax shown on the payslip would usually be a notional figure and not an actual tax deduction so no foreign tax credit relief would be due.
The individual should check this with their employer though to determine the actual position.
If, in the unusual scenario, the USA does have the right to tax some or all of the income per the DTA you will need to review the guidance in the HS263 regarding claiming any FTCR and it may be useful for you to look at DT1925, DT1925A & DT1925B.

Thank you

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