RSUs, or restricted stock units, are a common way for tech companies like Microsoft, Meta, Amazon, Intel, and Google to pay their employees. Instead of giving workers cash right away, employers promise to give them company shares in the future.
This makes RSUs a big part of employees’ long-term wages and wealth. To get the most out of RSUs, you need to know how they’re structured, how they’re treated, and how to lower your tax obligations.
Key Concepts:
- Getting RSUs
- How to Tax RSUs in the UK
- Ways to keep RSU taxes as low as possible
- Capital Gains Tax (CGT) on RSUs
Whether you’re new to RSUs or already have them, these ideas will help you make the best decisions about your money.
Getting RSUs:
RSUs are given to employees at important times in their careers, like when they are hired, when they pass their yearly performance review, or when the company meets its goals. When compared to Company Share Schemes, RSUs have set dates, such as the “grant date” (when the RSUs are given out) and the “vesting date” (when the shares become yours and can be sold). Most of the time, vesting happens over a few years, not all at once.
For example, if you join Microsoft in 2024 and are given 300 RSUs, you might get 25% of these units every year for four years.
You might also get a new grant every year, which would make the vesting plans overlap. This system, called “cliff vesting,” means that you’ll get shares in stages over time, which increases your chances of getting rich even more.
How Are RSUs Taxed in the UK?
RSUs are not normally taxed simply when they are granted. In a typical RSU arrangement, the main employment tax charge arises when the award vests and the shares are acquired. The value received can be treated as employment income and, depending on the shares and scheme, PAYE Income Tax and Class 1 National Insurance may apply.
HMRC describes an RSU as normally being an agreement to issue shares when the award vests, while employment-related shares that are readily convertible assets can require PAYE and National Insurance to be operated.
For example, if you make £200,000 a year in pay and £75,000 in RSUs, you might only get £34,058 after taxes, based on how you file your taxes. Usually, taxes are taken out before you get the shares, so you only get the net amount after taxes are taken out.
The exact amount deducted when RSUs vest depends on your total earnings, tax rate, National Insurance position and the terms of your employer’s share plan. In some share schemes, an employee may also agree or elect to meet some or all of the employer’s National Insurance liability. You should therefore check your vesting statement and payslip rather than assuming one fixed percentage applies to every RSU award.
Ways to keep RSU taxes as low as possible
Making payments to a pension plan is a good way to lower the taxes you owe on RSUs. You can lower your *adjusted net income* by putting money into your pension. This could lower your total tax bill and even your tax rate.
The slow decrease of the personal limit can lead to what is known as the “60% tax trap” for people who make between £100,000 and £125,140 a year. If you put more money into your pension, your taxed income will drop below this level. This will help you escape the high 60% rate and save more for retirement. It’s important to know that the most you can put into a pension each year and still get tax breaks is £60,000.
Pension contributions can be particularly relevant where RSU income pushes your adjusted net income above £100,000, because the Personal Allowance is reduced by £1 for every £2 of adjusted net income above that level.
The standard pension annual allowance for 2026/27 is £60,000, although a lower tapered annual allowance can apply to some higher earners. The tax relief available also depends on your earnings, previous contributions and individual circumstances, so large pension contributions should be checked before they are made.
| RSUs Received | No Pension Contribution | Pension Contribution |
| RSU value | £25,140 | £25,140 |
| Less: Employer NIC (13.80%) | -£3,469 | -£3,469 |
| Less: Income Tax (60% vs 40% after Employers NIC) | -£13,003 | -£8,668 |
| Less: Employee NIC (2.00%) | -£503 | -£503 |
| RSU Value after all taxes | £8,165 | £12,500 |
Capital Gains Tax (CGT) implications on RSUs
If the value of the shares goes up between when your RSUs vest and when you sell them, you may have to pay capital gains tax (CGT). If you sell the shares right after they vest, however, you will only have to pay the initial vesting tax.
If you make more than the yearly exemption, which for the 2024–25 tax year is £3,000, you have to pay capital gains tax. For earnings over this amount, the CGT rate is 10% for basic-rate taxpayers and 20% for higher-rate taxpayers. This is a lot less than the income tax rate, which can be as high as 45%.
Getting the best capital gains tax on RSUs
To pay the least amount of capital gains tax on your RSUs, think about these options:
1. Sell RSUs as soon as they vest
You can avoid taxed gains by selling the shares as soon as they become yours. You can buy back the shares in a tax-advantaged account, like an ISA or SIPP, where future growth is tax-free if you want to keep control.
2. Give your spouse your RSUs
With the *inter-spousal transfer exemption*, you can give your husband/wife shares of your business without having to pay taxes on them. You and your partner can each use their own CGT limits, which means you can sell twice as much before being taxed.
RSUs may form only one part of your wider tax position. Our Capital Gains Tax accountants can help with gains arising when vested shares are sold, while our HMRC enquiry support is available if HMRC questions a calculation or disposal. If you also receive rental income or plan to sell an investment property, our accountants for landlords and property owners can assist with your wider property tax and reporting obligations.
Conclusion
Selling RSUs is the easiest way for most people to avoid paying capital gains tax and keep their investments broad. If you hold on to RSUs, you may become more exposed to your company’s stock, which may be more risky than you want to take. If you know about RSU taxes, the benefits of pension contributions, and capital gains methods, you can make smart choices that will help your taxes and your long-term financial health.
