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The cap gain is only paid on the profit made when selling. RSUs are taxed as regular income when they are awarded. Most likely the employees are high rate tax p
by ropiku 11y ago
The cap gain is only paid on the profit made when selling. RSUs are taxed as regular income when they are awarded. Most likely the employees are high rate tax payers so it comes out at 40-45% tax + National Insurance.
- spacecowboy_lon 11y agoSorry what is this RSU you speak of? tax on employee share options is quite different in the UK to the USA. With a HMRC approved scheme CGT effectively goes away and you only pay CGT after your yearly allowance and only on a real gain - no massive tax bill on underwater share options.
- drited 11y agoRSU = restricted stock unit whether you're in the UK or the USA.
- spacecowboy_lon 11y agoNever heard of RSU's in the UK context - UK taxation depends on if its an approved scheme or not.
- kd5bjo 11y agoAn RSU is more like a stock grant than a purchase option -- the company provides shares of stock to its employees according to a vesting schedule. The fair market value of the shares at the time of vesting is considered income, and there is no cost to the employee (other than income taxes). I don't know if this is a US-only arrangement, or if it's used in other countries as well.
- ropiku 11y agoThe other repliers added more info, sorry. You are correct about share options, on which your gain is only the price difference for which you pay CGT (or not). But the liquid tech companies (Google, FB, Twitter) give out direct stock which is taxed on their Fair Market Value at the time of vesting. RSUs are taxed the same way both in UK and US.