Answers · UK 2025/26

How are Restricted Stock Units (RSUs) taxed in the UK?

RSUs are taxed as employment income (Income Tax plus NI) at the point of vesting, based on the market value of shares on the vesting date. Any subsequent growth in the share price is taxed as Capital Gains Tax at 18% or 24% when you sell. RSUs are not tax-advantaged -- unlike SAYE, EMI, or CSOP. Report on Self Assessment if required.

Last updated: 10 June 2026Last reviewed: 10 June 2026How we verify

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Restricted Stock Units (RSUs) are a common form of equity compensation, particularly in US-listed technology companies with UK employees. Understanding when and how they are taxed is essential to avoid unexpected bills. Vesting: RSUs are taxed as earnings (employment income) at the moment of vesting -- the date on which the restrictions lift and the shares are delivered to you. The taxable amount is the market value of the shares on the vesting date, less anything you paid for them (typically zero for RSUs, unlike options). Income Tax at your marginal rate (20%, 40%, or 45%) and employee NI (up to 8%) apply. Your employer has a legal obligation to withhold these through PAYE. Many US-listed employers use a "sell-to-cover" or "withhold-to-cover" mechanism -- automatically selling a proportion of your vested shares to settle the tax, so you receive fewer shares net. After vesting: once you own the shares, any further rise in price is a capital gain. When you sell, CGT applies to the gain above your base cost (the vesting date market value). CGT rates for 2026/27 are 18% (basic rate taxpayer) or 24% (higher rate) on the gain, after deducting the £3,000 Annual Exempt Amount. If the share price has fallen since vesting, you may have a capital loss to offset against other gains. Self Assessment: if you have RSU income and your employer does not adjust your PAYE code to collect the correct tax, or if you are a higher rate taxpayer with significant RSU vesting, you must register for and complete a Self Assessment tax return. RSUs are not subject to CGT when they lapse or are forfeited -- unlike options where you might have paid a premium. The s.431 election (ITEPA 2003) may be worth considering if your RSUs are granted with restrictions still attached at grant -- it ensures you pay Income Tax upfront on the unrestricted value and convert all future growth into CGT rather than income.