Work in London for a company headquartered in California and your equity lives a double life: granted under a US plan, administered by a US broker, denominated in dollars — and taxed, almost entirely, by HMRC. Most of the English-language internet explains the American half, which is exactly the half that doesn’t apply to you. Here is the UK employee’s complete map: vest, payroll, sale, dividends, forms, and the special chaos of moving countries mid-grant.
At vest: UK employment income, full PAYE treatment
When your RSUs vest, the sterling value of the shares that day is employment income, taxed through your normal UK payslip:
- Income tax at your marginal rate — 20%, 40% above £50,270, 45% above £125,140 (2025/26); plus the infamous ~60% effective band between £100,000 and £125,140 as the personal allowance tapers, which large vests sail straight into;
- Employee National Insurance — 8% up to the upper earnings limit, 2% beyond (and the company pays employer NI of 15%, which some plans pass to employees by agreement — check yours);
- collected via sell-to-cover: the broker liquidates enough shares for payroll to remit. A 40%-band employee loses ≈47% of shares at vest; in the taper band it can exceed half. Painful, but unlike the US flat-22% system, it rarely leaves a year-end debt.
A London vest, in pounds
Eleanor (salary £95,000) vests 200 shares at $60 with £/$ at 1.25: vest value £9,600. The vest pushes her into the allowance taper, so the effective rate on much of it approaches 60% + 2% NI. Sell-to-cover takes ~118 shares; 82 land in her account with a base cost of £9,600 × (82/200) ≈ £48 per share in sterling terms. Her payslip that month shows the £9,600 as pay and the tax withheld — the document to keep.
At sale: capital gains, computed in sterling
Shares kept after vest are ordinary foreign shares. Sell later and UK CGT applies to the gain over your sterling base cost at vest: first £3,000 of total annual gains exempt, then 18%/24%. Because everything converts to pounds at each event, currency is part of the result — a flat stock with a weaker pound at sale produces a real taxable gain, and vice versa. Report via Self Assessment’s capital gains pages (or the real-time service); the broker tells HMRC nothing on your behalf.
Keep your own lot ledger: vest date · shares · USD price · exchange rate · GBP base cost, one line per vest. US brokers’ statements are built for IRS forms, not HMRC ones; five minutes per vest now saves an archaeological dig at sale time.
The American side: smaller than it looks
- W-8BEN: the one US form that matters. Filed with the broker, it certifies you’re not a US person and invokes the US-UK treaty rate of 15% withholding on dividends (instead of up to 30%). It expires after three calendar years — diarise the renewal; brokers go quiet and then over-withhold.
- Dividends: the 15% withheld in the US credits against your UK dividend tax (allowance £500, then 8.75/33.75/39.35%). Net result: you broadly pay the higher of the two systems, once.
- Vests and sales: for a UK-resident, UK-working employee, no US income tax and no US return. The 1099 forms brokers sometimes emit are noise for you (and a W-8BEN-renewal alarm).
- Sanctions of forgetting: an expired W-8BEN typically triggers backup-style over-withholding on dividends and gross proceeds — recoverable only with real friction.
Moving countries mid-vest: the apportionment rule
RSU income is generally sourced to where you worked during the vesting period. Move from the US to the UK (or the reverse) halfway through a grant, and a vest after the move is split — by workdays — between the two countries, each taxing its slice, with the treaty and foreign tax credits preventing true double taxation when claimed correctly. Payroll systems frequently get this wrong in both directions (taxing 100% in the new country is the classic error). If a transatlantic relocation intersects your vesting schedule, this is the moment for a dual-qualified adviser; the fee is small against a mis-sourced six-figure vest. The same logic, intra-US, appears in our US RSU guide.
Strategy notes that survive the channel crossing
- Concentration mathematics doesn’t care about borders: salary and equity from one employer plus currency exposure argue for the same disciplined trimming covered in concentration risk — UK readers add FX as one more correlated variable.
- Use the wrappers you do control: vest proceeds can fund ISAs (£20,000/yr) and pensions, converting future growth to tax-free/deferred — the RSUs themselves can’t live in an ISA, but their proceeds can.
- The £100k cliff is a planning trigger: pension contributions around big vest years can rescue the personal allowance and childcare entitlements; crude but effective arithmetic worth running every January.
- Forms calendar: Self Assessment registration if vests/gains require it; 31 January filing; W-8BEN every third year. Three dates, most of the admin.
Key takeaways
- For UK employees, RSU value at vest is employment income taxed through PAYE — income tax (20/40/45%) plus employee NI (8%/2%) — regardless of the US parentage.
- Higher-rate taxpayers routinely see ~47% of a vest withheld via sell-to-cover; additional-rate plus NI can push past half once the 60% effective band (£100k-£125,140) bites.
- Your CGT base cost is the sterling value at vest; later sales are UK capital gains computed in pounds, with FX movements part of the gain.
- File the W-8BEN with the US broker: it certifies non-US status and cuts US dividend withholding to 15% under the treaty; vests themselves carry no extra US tax for UK-only taxpayers.
- Cross-border moves during a vesting period split the income between countries by workdays — the one scenario where professional help earns its fee.
Frequently asked questions
Why did almost half my vest disappear when US colleagues lost ~30%?
Different tax systems on identical grants. UK withholding at vest reflects your real marginal rates — 40% or 45% income tax plus 2% NI — while US federal withholding uses a flat 22% (often less than colleagues ultimately owe). You're not being charged extra; you're being withheld accurately.
Do I owe American tax on my RSUs?
Vest income for a UK tax resident working in the UK is UK-taxed; the US doesn't tax non-residents' wages for non-US workdays. US-source dividends carry withholding — 15% with a valid W-8BEN — which UK tax on the dividend credits under the treaty. No US tax return needed for the typical UK employee.
How do I work out CGT when everything is in dollars?
Convert at each event: sterling value at vest = base cost; sterling value at sale = proceeds (use the actual GBP amounts if you converted, or appropriate exchange rates if not). The gain includes currency movement. After the £3,000 annual exempt amount, gains are taxed at 18%/24%.
My broker reported the sale to the IRS on a 1099 — do I need to act?
A 1099 sent to a certified non-US person is usually just paperwork spillover (or a sign your W-8BEN lapsed — they expire after three calendar years). Your reporting duty is to HMRC via Self Assessment. Refresh the W-8BEN and keep the broker's statements for your UK records.
Educational disclaimer: This guide is general information, not financial, investment, tax or legal advice. Figures refer to the tax years stated and change over time; rules differ by jurisdiction and personal circumstances. Verify current figures with the IRS / HMRC and consult a qualified professional before acting. See our full disclaimer.