Capital Gains on RSUs

[Pistonpants]

I’ve got some RSUs from work that have done very well and want to lock in the gains in this tax year before the CGT allowance reduces.

Am I correct if I sell the shares but leave the proceeds in E*Trade in USD that is enough to crystallise the gain in this tax year, or would I have to transfer the funds from the dealing account in the US to my UK bank account in GBP?

[The Leaper]

Please clarify your tax status in the UK. Are you a UK resident and a normal UK tax payer? If so, please confirm. If not, please clarify your tax status.

R.

[mikef]

That worked for me in a previous tax year (resident and ordinarily resident in UK) - but with non-resident tax holding in the US

The funds were remitted to the UK 6 months later, not helped by Fidelity insisting on sending me a physical cheque (check) that Barclays then had to send to their correspondent bank in the US before funds could be released

[Pistonpants]

I’m a uk resident and normal UK tax payer

[The Leaper]

Pistonpants said:

I’m a uk resident and normal UK tax payer

The tax treatment of overseas earnings, dividends, capital gains etc can be either on a remittance or an arising basis. The former means that UK tax applies only once the earnings etc have been actually remitted to the UK. The latter means that UK tax applies irrespective of whether or not the earnings etc have actually been remitted to the UK.

As you are a UK resident and a normal UK tax payer, the remittance basis is not available to you: you will be taxed on the arising basis. So, you are liable for any applicable UK tax on the value of the RSUs whether you remit that value to the UK or hold the value outside of the UK. My understanding is that a UK tax payer is subject to income tax on the value of the RSUs in the UK income tax year when they vest, and I recall that this is what happened to my RSUs which was many years ago now.

In the event that there's any withholding tax in the country where and when the RSUs vest, that tax can be offset against UK tax.

This is not advice, just my understanding of the situation. You may need to get professional advice for 100% clarification.

R.

[The Leaper]

Regarding your original question about potential UK CGT, my understanding is that when the RSUs vest there will be no capital gain so no CGT liability. However, if and when sold later, a liability to UK CGT will arise in respect of any gain.

R.

[mikef]

Right - I've always done same-day sales when stock vests, so my circumstances may be different

[CharlesElliott]

Pistonpants said:

I’ve got some RSUs from work that have done very well and want to lock in the gains in this tax year before the CGT allowance reduces.

Am I correct if I sell the shares but leave the proceeds in E*Trade in USD that is enough to crystallise the gain in this tax year, or would I have to transfer the funds from the dealing account in the US to my UK bank account in GBP?

Yes - income tax on vesting, CGT on sale (even if cash is left in the US).

When calculating capital gains, you need to convert acquisition price and sale price at the relevant exchange rate at the time, and you may also need to do a Section 104 holding calculation if you hold multiple tranches of the same stock, acquired at different times / costs.

[supersport]

Why would you leave the proceeds sat in E-Trade?

I've always wanted the money back home and working for me. The exchange rate is quite nice at the moment.

[Panamax]

The Leaper said:

However, if and when sold later, a liability to UK CGT will arise in respect of any gain.

...and the relevant "date" when the gain crystallises is the date the sale contract is made. If settlement is at a later date that doesn't matter. So there's still a couple of days to go.

[TonyG2003]

Hi. You need to sell your RSU, transfer them to £ and then calculate your CGT. You can’t pay CGT unless you have realised the gain.

I presume your employer paid your tax via withholding (usually via sale of shares) and you completed a 88-BEN. If so you are fine to just declare your CGT on your tax return.

[Pistonpants]

Thanks guys.

Sounds like I can sell before the 6th April to lock in the gain then worry about what to do about the proceeds later. I’ll likely set up a stocks and shares ISA and reinvest them in the same stock.

[Alpinestars]

The Leaper said:

Pistonpants said:

I’m a uk resident and normal UK tax payer

The tax treatment of overseas earnings, dividends, capital gains etc can be either on a remittance or an arising basis. The former means that UK tax applies only once the earnings etc have been actually remitted to the UK. The latter means that UK tax applies irrespective of whether or not the earnings etc have actually been remitted to the UK.

As you are a UK resident and a normal UK tax payer, the remittance basis is not available to you: you will be taxed on the arising basis. So, you are liable for any applicable UK tax on the value of the RSUs whether you remit that value to the UK or hold the value outside of the UK. My understanding is that a UK tax payer is subject to income tax on the value of the RSUs in the UK income tax year when they vest, and I recall that this is what happened to my RSUs which was many years ago now.

In the event that there's any withholding tax in the country where and when the RSUs vest, that tax can be offset against UK tax.

This is not advice, just my understanding of the situation. You may need to get professional advice for 100% clarification.

R.

Not sure if you’re confusing residence with domicile.

[The Leaper]

Alpinestars said:

The Leaper said:

Pistonpants said:

I’m a uk resident and normal UK tax payer

The tax treatment of overseas earnings, dividends, capital gains etc can be either on a remittance or an arising basis. The former means that UK tax applies only once the earnings etc have been actually remitted to the UK. The latter means that UK tax applies irrespective of whether or not the earnings etc have actually been remitted to the UK.

As you are a UK resident and a normal UK tax payer, the remittance basis is not available to you: you will be taxed on the arising basis. So, you are liable for any applicable UK tax on the value of the RSUs whether you remit that value to the UK or hold the value outside of the UK. My understanding is that a UK tax payer is subject to income tax on the value of the RSUs in the UK income tax year when they vest, and I recall that this is what happened to my RSUs which was many years ago now.

In the event that there's any withholding tax in the country where and when the RSUs vest, that tax can be offset against UK tax.

This is not advice, just my understanding of the situation. You may need to get professional advice for 100% clarification.

R.

Not sure if you’re confusing residence with domicile.

Maybe I should have said "resident and domiciled" in the UK.

R.

[Alpinestars]

The Leaper said:

Maybe I should have said "resident and domiciled" in the UK.

R.

Think so.

Domicile is the important factor re remittance - knowing someone is UK resident.