Foreign RSUs on Self Assessment
Discussion
Looking for some advice on how to code these into my tax return (if at all).
I received over the last four years RSUs which vest over a 4 year period. They are a US Stock priced and held in Dollars (US company).
On Vesting, a portion of the shares are withheld for tax (but in the US, I've filled in the relevant W1 BEN Forms).
Do I need to put these into my tax return (I'm presuming yes, along with the tax which has been withheld), and if so, how do I do it? Does it go in the foreign income section? How would I tell if these shares are PAYE? An entry for tax does seem to appear on my payslip in the vesting month, but I'm not sure if this is relevant or not.
I also receive dividends, but these come in via my payslip; so I'm presuming they are PAYE and don't need to be considered
Any help gratefully received.
Joe
I received over the last four years RSUs which vest over a 4 year period. They are a US Stock priced and held in Dollars (US company).
On Vesting, a portion of the shares are withheld for tax (but in the US, I've filled in the relevant W1 BEN Forms).
Do I need to put these into my tax return (I'm presuming yes, along with the tax which has been withheld), and if so, how do I do it? Does it go in the foreign income section? How would I tell if these shares are PAYE? An entry for tax does seem to appear on my payslip in the vesting month, but I'm not sure if this is relevant or not.
I also receive dividends, but these come in via my payslip; so I'm presuming they are PAYE and don't need to be considered
Any help gratefully received.
Joe
I had the same issue with my old employer. When I looked at my payslips for the vesting month, I could see that UK tax had been deducted. I had to fill in the W8-BEN but never had to file tax returns in the US.
I always sold shares as soon as they vested so didn't have any gains to declare (i.e. selling price versus vesting price) and I didn't make any additional declaration on my self-assessment as I could see that the correct amount of UK tax had been deducted.
If you held the vested shares for longer and received dividends on vested shares or sold at a different value to vesting (above the capital gains threshold), it would be a different story.
I always sold shares as soon as they vested so didn't have any gains to declare (i.e. selling price versus vesting price) and I didn't make any additional declaration on my self-assessment as I could see that the correct amount of UK tax had been deducted.
If you held the vested shares for longer and received dividends on vested shares or sold at a different value to vesting (above the capital gains threshold), it would be a different story.
Pheo,
Several points based on my experience.
1. The RSUs were probably issued to you at a fixed value at the time of the grant. When they vest (several years later which looks like 4 years in your case) they will have a different value. If the value is less than at the time of the grant I assume that you will not want them to vest so you rescind the option, in which case there's no gain and no tax liability. If the value has increased, as hoped, and if you then let them vest, there is a gain for which you are liable. As I recall, the gain is treated as taxable for income tax in the UK. When this happened to me I called HMRC and they told me how to make a specific payment for the tax due outside of the self assessment process.
2. Assuming that you let the shares vest, you will receive dividends. These dividends will normally be liable to USA tax but as you have lodged a W-8BEN with the USA IRS, you are only liable in the USA to the lower withholding tax. This tax will be deducted at source so you will receive into the UK a net payment. You are liable to income tax on the dividends and you use the Foreign Forms available from HMRC's website in order to correctly record the gross amount due, the withholding tax deducted, and the net amount received. This will be added to your UK income and therefore tax will be paid at your highest rate. Note that you must insert amounts in £s...I use the exchange rate at the date of receipt into the UK. One tip when completing the Foreign Forms: do not claim foreign tax relief credit because if you do make the claim you will pay UK income tax on the gross not net amount.
However, I note that you say that the dividends have been taxed in the UK via PAYE so I assume that they have been paid gross via PAYE. You should check what’s happened regarding the USA withholding tax: has it been overlooked in which case you have probably paid too much UK income tax. I assume that this is a special arrangement with HMRC. I do not know how to show these payments etc when completing your self-assessment return...maybe as other income, with all the details? Can you employer give guidance to you on this?
3. Note that the W-8BEN has a lifetime of three years so has to be renewed in order to continue to have the dividends taxed at the withholding rate in USA before payment to you.
4. If at some time you decide to sell the vested RSUs I assume that the amount realised will be subject to UK capital gains tax. There's plenty of useful information on HMRC's website about calculating the capital gain and the tax due on it. Note the need to establish and maintain what's called a section 104 holding. I would strongly urge you to keep detailed historical records of all transactions regarding RSUs because reconstructing this later can be a real bind!
R.
Several points based on my experience.
1. The RSUs were probably issued to you at a fixed value at the time of the grant. When they vest (several years later which looks like 4 years in your case) they will have a different value. If the value is less than at the time of the grant I assume that you will not want them to vest so you rescind the option, in which case there's no gain and no tax liability. If the value has increased, as hoped, and if you then let them vest, there is a gain for which you are liable. As I recall, the gain is treated as taxable for income tax in the UK. When this happened to me I called HMRC and they told me how to make a specific payment for the tax due outside of the self assessment process.
2. Assuming that you let the shares vest, you will receive dividends. These dividends will normally be liable to USA tax but as you have lodged a W-8BEN with the USA IRS, you are only liable in the USA to the lower withholding tax. This tax will be deducted at source so you will receive into the UK a net payment. You are liable to income tax on the dividends and you use the Foreign Forms available from HMRC's website in order to correctly record the gross amount due, the withholding tax deducted, and the net amount received. This will be added to your UK income and therefore tax will be paid at your highest rate. Note that you must insert amounts in £s...I use the exchange rate at the date of receipt into the UK. One tip when completing the Foreign Forms: do not claim foreign tax relief credit because if you do make the claim you will pay UK income tax on the gross not net amount.
However, I note that you say that the dividends have been taxed in the UK via PAYE so I assume that they have been paid gross via PAYE. You should check what’s happened regarding the USA withholding tax: has it been overlooked in which case you have probably paid too much UK income tax. I assume that this is a special arrangement with HMRC. I do not know how to show these payments etc when completing your self-assessment return...maybe as other income, with all the details? Can you employer give guidance to you on this?
3. Note that the W-8BEN has a lifetime of three years so has to be renewed in order to continue to have the dividends taxed at the withholding rate in USA before payment to you.
4. If at some time you decide to sell the vested RSUs I assume that the amount realised will be subject to UK capital gains tax. There's plenty of useful information on HMRC's website about calculating the capital gain and the tax due on it. Note the need to establish and maintain what's called a section 104 holding. I would strongly urge you to keep detailed historical records of all transactions regarding RSUs because reconstructing this later can be a real bind!
R.
The Leaper said:
If the value is less than at the time of the grant I assume that you will not want them to vest so you rescind the option, in which case there's no gain and no tax liability.
It sounds like you are talking about options here; I assumed that by RSUs OP was talking about shares. In my experience the way RSUs work is that you are allocated a fixed number of shares, and then you get 'paid' a number of shares at each vesting date. The only relevant value for tax purposes is that at the vesting date, and you pay UK income tax on that value.The Leaper said:
Pheo,
2. Assuming that you let the shares vest, you will receive dividends. These dividends will normally be liable to USA tax but as you have lodged a W-8BEN with the USA IRS, you are only liable in the USA to the lower withholding tax.
However, I note that you say that the dividends have been taxed in the UK via PAYE so I assume that they have been paid gross via PAYE.
I assumed here that OP is referring to pre-vesting dividends. In reality, these aren't dividends paid on an asset owned, they are equivalent amounts paid by the company, so from HMRC's perspective they are PAYE income.2. Assuming that you let the shares vest, you will receive dividends. These dividends will normally be liable to USA tax but as you have lodged a W-8BEN with the USA IRS, you are only liable in the USA to the lower withholding tax.
However, I note that you say that the dividends have been taxed in the UK via PAYE so I assume that they have been paid gross via PAYE.
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