Last reviewed: 19 October 2026. Tax figures relate to 2026/27.
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When RSUs vest in the UK, their market value is generally taxed as employment income, usually through PAYE, whether you sell the shares or not. Selling at vest therefore usually adds little or no further tax and reduces how much of your wealth depends on one employer. Holding can suit your wider plan, but any rise after vesting may be subject to capital gains tax when you sell.
RSUs and financial planning
Many US technology companies offer restricted stock units (RSUs) alongside Employee Share Purchase Plans (ESPPs) to attract and retain employees, align employee and shareholder interests, and provide long-term incentives.
The key is that an RSU award is normally a promise to deliver shares once specified conditions are met. There is generally no immediate ownership or tax liability at grant. Your employer’s vesting schedule determines when you receive the shares, often over several quarters or years.
Understanding their value after tax, and how they fit into your retirement plans, cash needs and wider investments, is essential. See HMRC’s explanation of RSUs.
Understanding RSUs
Ownership and purchase price
Unlike conventional share options, RSUs generally have no exercise price. You receive shares once the award vests and settles, subject to its conditions.
For a fixed award, a change in the share price changes its value rather than the number of units granted. Shares may be withheld or sold to meet tax liabilities, reducing the number you retain.
Income tax and National Insurance
At vesting, the market value of the shares received is generally treated as employment income.
For 2026/27, income tax rates on employment income in England, Wales and Northern Ireland are 20%, 40% and 45%, depending on your income. Income tax rates are different in Scotland.
For most employees, National Insurance is 8% on earnings between £242 and £967 a week and 2% above £967, calculated through payroll using the relevant pay period.
Employer National Insurance is generally 15%, up from 13.8% on 6 April 2025. Some schemes require employees to meet this cost under an agreement or election. Qualifying payments can receive income tax relief, so the headline rates should not simply be added together. Check your scheme and payslip. HMRC’s 2026/27 rates.
Capital gains tax
Selling at vesting usually produces little or no capital gain. If you retain the shares, subsequent growth may create a taxable gain when you sell.
For 2026/27, the individual annual capital gains tax allowance is £3,000. Taxable gains on shares are charged at 18% to the extent they fall within your unused basic-rate band, and 24% above it. These rates have applied since 30 October 2024. The allowance applies across your gains for the year, rather than separately to each investment. HMRC’s capital gains tax rates.
Should you sell at vest or hold?
Consider your exposure to one employer. Whether you work for Google, Amazon or another technology company, it is vital to differentiate loyalty from financial diversification and risk. Your salary, bonus, future awards and existing savings may all depend on the same business. Selling some or all of your vested shares can reduce that exposure. Holding may suit your wider plan, provided you can afford the potential loss.
Consider dollar exposure. If your shares are priced in US dollars but your spending is in pounds, exchange rates also affect their value to you. For UK capital gains tax, acquisition costs and sale proceeds are calculated in sterling at their respective dates. An unchanged dollar share price can therefore still produce a sterling gain or loss. HMRC’s foreign-currency guidance.
Plan for a large vest. RSU income can push adjusted net income above £100,000. Your £12,570 personal allowance then falls by £1 for every £2 above that threshold, disappearing at £125,140. This creates an effective 60% marginal income tax rate within that range in England, Wales and Northern Ireland, before National Insurance.
For example, assume your income before vesting is £95,000, with no other income or deductions, and £15,000 of RSUs vest. Your income becomes £110,000 and your personal allowance falls by £5,000. The additional income tax is £8,000: £6,000 on the award at 40%, plus £2,000 from losing that allowance. This excludes National Insurance and assumes you do not meet employer National Insurance. Selling or holding does not change this vesting tax charge. HMRC’s personal allowance rules.
Frequently asked questions regarding RSUs
Should I sell my RSUs when they vest?
Selling at vesting can be a sensible way to diversify, but the decision should reflect your wider financial plan.
Consider your cash needs, retirement timetable and existing company shareholding. Your adviser can provide impartial advice without an emotional connection to the business and help formulate a graduated divestment plan.
How are RSUs taxed in the UK?
RSUs are generally taxed as employment income at vesting, with capital gains tax potentially applying to later growth when you sell.
For typical listed-company awards, your employer usually deducts income tax and National Insurance through payroll, sometimes by selling or withholding shares. Check that these deductions cover your actual liability. International working arrangements or unusual scheme terms can change the position.
Do I pay tax twice on RSUs?
You do not normally pay income tax and capital gains tax on the same value.
The value brought into account at vesting generally establishes the capital gains tax base cost. A later sale is assessed against that cost, subject to the applicable share-matching rules. A fall after vesting does not normally reverse the employment income tax already charged. HMRC’s employee share scheme guidance.
How do I work out the capital gain on my RSUs?
Your gain is generally the sale proceeds less the allowable acquisition cost and selling costs, calculated in sterling.
Suppose 100 shares vest on 1 May 2026 at £50 each. Their £5,000 value is treated as employment income and generally establishes their base cost.
You sell all 100 on 1 September 2026 for £60 each:
- Sale proceeds: £6,000
- Base cost: £5,000
- Capital gain before costs: £1,000
If this is your only gain and your full £3,000 allowance is available, no capital gains tax is due. If your allowance is already used and the whole gain falls above your basic-rate band, tax would be £240.
This simplified example assumes you retain all 100 shares, settle employment taxes separately and have no other holdings or acquisitions affecting the calculation. Existing holdings, same-day transactions and acquisitions within 30 days after a sale can change which shares are matched. HMRC’s share-matching rules.
Am I restricted in when I can sell my shares?
Yes, company trading windows, blackout periods and approval requirements can restrict sales after vesting.
There is no universal minimum holding period for ordinary RSUs, but your scheme may impose restrictions. Insider-dealing rules can also prevent a sale, even during an open trading window. Check your employer’s policy before giving instructions.
What happens to my RSUs if I leave the company?
Unvested RSUs are usually forfeited when you leave, although your scheme’s terms determine the outcome.
Redundancy, retirement, ill health or other leaving circumstances may receive different treatment. Check the award documents before making employment decisions.
What are the differences between RSUs and stock options?
RSUs generally deliver shares without an exercise payment, while options give you the right to buy shares at a specified price.
An option may have no economic value if the share price is below its exercise price. RSUs can retain value even after a price fall. Tax treatment depends on the particular arrangement.
Can pension contributions help manage the tax?
Pension contributions may reduce your overall income tax liability, subject to eligibility and contribution limits.
With relief-at-source personal pensions, the provider adds basic-rate relief and eligible taxpayers can claim further relief. Annual allowance restrictions, including tapering for high earners, need checking. Salary sacrifice requires an appropriate employer arrangement agreed in advance. Simply retaining vested shares does not defer the income tax charge until retirement. HMRC’s pension tax relief guidance.
How do RSUs fit into estate planning?
Vested shares should be considered alongside your other investments when reviewing your estate.
The treatment of unvested awards on death depends on the scheme. Do not assume they automatically vest. Long-term planning may involve gifting, charitable donations or trusts, depending on your circumstances.
Bringing RSUs into your wider plan
If you receive RSUs, whether vested or unvested, tell your financial adviser. What matters is their net value after deductions and how they support your objectives.
At Thera Wealth Management, we can help you integrate RSUs into your long-term financial planning and estate management. Contact us to discuss your circumstances.
This blog is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.
The taxation of the investment is dependent on the individual circumstances of each investor and may be subject to change in the future.
Any rates of investment growth shown are intended as a guide only. They are not guaranteed, nor are they intended to be either minimums or maximums.
A pension is a long-term investment and the value is not guaranteed. Any advice or considerations are personal to each individual’s circumstancesThe value of your investment and the income from it may go down as well as up. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
Philip is a CFP and Chartered Wealth Manager with a Masters in Finance from London Business School. He specialises in helping senior executives, professionals and their families make better financial decisions. His work focuses on retirement planning, investment management and helping clients make the most of their wealth.
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