How to Report RSUs on Your Self Assessment Tax Return

 What are RSUs?

Restricted Stock Units (RSUs) are a common part of employee pay, particularly at tech companies. RSUs promise you company shares that vest over time. When they vest, the value of the shares is taxed as employment income, and when you later sell the shares any growth is subject to Capital Gains Tax.

This guide walks you through how to report RSUs on your Self Assessment tax return step by step: the capital gains pages, the share matching rules, sterling values at each vest and sale, and why the figures on your US broker statement are usually wrong for UK purposes.

 Which award do you actually have?

We use “RSUs” throughout this guide because that is the term most people search for. In practice, clients often call every share award an RSU, but platforms such as Carta show RSUs, RSAs and options as separate award types, and the type decides the tax.

• RSUs: you pay no price, the shares are delivered at vest and you are taxed at vest. A section 431 election is not relevant.
• Restricted shares: shares issued to you upfront that can be forfeited, often shown on Carta as RSAs. A section 431 election can help here.
• Shares from exercised options: you paid an exercise price. Early exercise gives you restricted shares, so section 431 applies.

RSUs at private companies are often double trigger. They only settle, and are only taxed, when a liquidity event such as an IPO happens. This can bring several years of vesting into a single tax year, so planning ahead matters.

Check the award type on Carta: RSU, RSA or option. Clients often call them all RSUs, but the type decides the tax.

 How RSUs are taxed

1. At vesting:
   The market value of the shares at the vesting date is taxed as employment income. Income tax and employee National Insurance are normally collected through payroll, often by selling some of the shares (sell to cover). For a higher or additional rate taxpayer the combined rate is usually 42% or 47%. If you have left your employer and kept your RSUs, employer NI may also be passed on to you where your plan allows it.
2. When you sell:
   If the shares have grown in value since vesting, the gain is subject to Capital Gains Tax (CGT). The rates are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers, with an annual exempt amount of £3,000 for both 2025/26 and 2026/27.

 Step 1: Check whether you need to complete the capital gains pages

Even when the vest has been taxed through payroll, any sale of shares must be reported on the capital gains pages of your Self Assessment tax return (SA108 on paper, the capital gains section online) if:

• your total gains are more than the £3,000 annual exempt amount;
• your total sale proceeds are more than £50,000, even if you made no gain; or
• you want to claim a capital loss.

Sell to cover sales on the vest date usually count towards your proceeds, so it is easy to cross the £50,000 reporting limit without realising.

 Step 2: Build a record of every vest and sale in sterling

UK tax is calculated in pounds sterling, so every vest and every sale must be converted at the exchange rate on the date it happened:

• Each vest: the number of shares, the market value per share and the exchange rate on the vesting date. The sterling value taxed as income becomes your base cost.
• Each sale: the number of shares, the sale price, any fees and the exchange rate on the sale date.
• Withheld shares: shares sold or withheld to cover tax at vest, which still need to be accounted for.

Using one average exchange rate for the whole year, or converting the final dollar gain, can give a very different answer to the correct figure.

 Step 3: Apply the share matching rules

When you sell shares, UK rules decide which shares you are treated as selling, in this order:

1. Same day: shares acquired on the same day as the sale, for example a sell to cover on the vest date.
2. Next 30 days: shares acquired in the 30 days after the sale, often called the bed and breakfast rule. A later RSU vest can be matched against an earlier sale.
3. Pooled average cost: everything else comes from your section 104 pool, which holds all your other shares in the company at their average sterling cost.

Because RSUs vest regularly, future vesting events can change the gain on a sale you have already made, so the pool needs to be kept up to date.

 Step 4: Do not rely on US broker figures

Brokers such as Morgan Stanley, Schwab, E*TRADE and Fidelity produce figures for US tax purposes. They are usually wrong for a UK return because:

• they are in US dollars, not sterling converted at each vest and sale date;
• they use US lot matching rather than the UK same day, 30 day and pooled average cost rules;
• the cost basis can be missing, shown as zero or not reflect the value already taxed through payroll; and
• sell to cover sales and fees may be shown differently from how they are treated in the UK.

Use the broker statements as a source of dates, quantities and prices, then work out the UK figures yourself or ask an adviser to do it.

 Step 5: Enter the figures on your tax return

On the capital gains pages you report the total sale proceeds, the allowable costs, the gains and any losses for the tax year. Keep your sterling working papers, as HMRC may ask how the figures were calculated. If income from your RSUs was not fully taxed through payroll, it also needs to be included in the employment section.

 How to reduce RSU taxes

1. Sell shares immediately after vesting
   Selling straight after vesting usually means little or no gain, as the base cost is the value already taxed as income. You may still need to report the sale, particularly if your total proceeds are over £50,000.
2. Use tax advantaged accounts
   • ISAs: if you want to keep investing in the company, you could sell the shares when you receive them and buy them back within an ISA so future growth is protected from tax. You can contribute up to £20,000 a year in 2025/26 and 2026/27. Gains and dividends within an ISA are tax free. Remember the 30 day rule does not apply to shares bought back inside an ISA.
   • SIPPs (Self Invested Personal Pensions): investments held within a pension grow tax free and you may also benefit from tax relief on contributions. These claims are not automatic and we have seen many cases where higher earners were not claiming the relief they were due. Pension contributions are one of the most effective ways to reduce your tax.
3. Transfer shares to a spouse
   Shares transferred to a spouse or civil partner are not taxed at the time of transfer. When your spouse sells, they can use their own £3,000 annual exempt amount, and if they are a basic rate taxpayer some of the gain may be taxed at the lower rate.
4. Maximise pension contributions
   Pension contributions reduce your adjusted net income and can bring you into a lower tax band, which is particularly useful in a year with large RSU vests. If you are a parent concerned about losing childcare support, pension contributions can help keep your income below £100,000.
5. Utilise elections (e.g., s.431 election)
   A section 431 election, made jointly with your employer within 14 days of acquiring restricted shares (share awards, private company shares, or shares from options exercised into restricted shares), taxes the unrestricted value up front so that later growth falls under Capital Gains Tax instead of income tax. It does not apply to RSUs, which are not securities until the shares are delivered.
6. Plan before you leave
   Where options are exercised after you leave, the gain is still taxed as employment income, with income tax and employee NI, and employer NI too where the plan includes an NI agreement or election. Together these can take a large share of the sale proceeds, so the timing of exercise and planning before you leave matter.

 Examples of RSU tax calculations

An employee receives 100 RSUs, each worth £50 at vesting.

If the shares are sold at the same price immediately:

• Income tax: £5,000 x 40% = £2,000 (assuming a 40% taxpayer)
• Employee NI: £5,000 x 2% = £100
• No CGT, as there is no gain.

If the shares are sold later at £70 each:

• Income tax: £5,000 x 40% = £2,000 (assuming a 40% taxpayer)
• Employee NI: £5,000 x 2% = £100
• Gain: £7,000 less £5,000 = £2,000. No CGT, as the gain is below the £3,000 annual exempt amount.

If the shares are sold later at £120 each:

• Income tax: £5,000 x 40% = £2,000 (assuming a 40% taxpayer)
• Employee NI: £5,000 x 2% = £100
• Gain: £12,000 less £5,000 = £7,000. After the £3,000 annual exempt amount, £4,000 is taxed at 18% or 24%. At 24%, the CGT payable is £960.

In practice the share prices and exchange rates differ at each vest and sale, and the matching rules above decide which costs apply, so real calculations are rarely this simple.

 Frequently asked questions

Q: Do I need to report RSUs if tax was taken through payroll?

A: Usually the income at vest is taxed through payroll, but you still need to complete the capital gains pages if you sold shares and your gains were over £3,000, your total proceeds were over £50,000, or you want to claim a loss.

Q: Which exchange rate should I use?

A: Convert each vest and each sale at the exchange rate on the date it happened, and keep a record of the rates used.

Q: Can I use the gain shown on my US broker statement?

A: Usually not. Broker figures are in dollars and follow US rules, so they need to be recalculated in sterling using the UK share matching rules.

Q: What is the 30 day rule?

A: If you buy or receive shares in the same company within 30 days after a sale, the sale is matched with those new shares first rather than your pooled average cost.

Q: Can I make a section 431 election on RSUs?

A: No. Section 431 applies to restricted shares, such as RSAs or shares from early exercised options, not to RSUs.

 Appoint TaxQube to report your RSUs on your Self Assessment tax return

Being a regulated firm of specialist tax accountants, we can help you report your RSUs correctly and submit your Self Assessment tax return to HMRC. We look after a large number of professionals from various industries and are able to deal with foreign currency and complex pooling calculations.

This is a specialist area of tax, and we even get referrals from other professional services firms to take care of their RSU vesting and ESPP clients and handle their reporting duties.

Unlike other firms, we do not charge anything from your tax savings, which could be in the thousands; you keep 100% of it. We have seen cases where people miss out by doing it themselves or by not using a specialist tax advisory firm like TaxQube.

We only charge an all inclusive monthly retainer fee with no extra invoices, which gives you access to accredited tax advisers who keep your cost pool up to date and help you proactively plan and optimise your taxes. Contact us for a free of charge initial consultation.