RSUs on Your Payslip? You May Still Owe Tax on US Shares

If your RSUs appear on your payslip, the tax on the vesting has been dealt with, but that is usually not the end of the story. Payroll only taxes the value of the shares on the day they vest. Everything that happens after that, from selling the shares to receiving dividends and interest, sits outside payroll and is your responsibility to report.

We meet many employees of US listed companies who assumed that because their RSUs were taxed through PAYE, they had nothing more to do. In reality, sales, dividends and cash held at the broker can all create further tax, and HMRC expects you to declare it.

This guide explains what payroll covers, what it leaves out, and when you need a Self Assessment tax return.

What does payroll cover when your RSUs vest?

Payroll covers the income tax and National Insurance on the market value of your shares on the vesting date, and nothing more. Your employer adds that value to your pay, deducts the tax, and usually sells some shares to fund it. The result appears on your payslip and P60.

Payroll does not cover:

• the shares sold to cover the tax, which count as a sale in their own right
• any later sale of the shares you keep
• dividends paid on your shares
• interest earned on cash held in your brokerage account
• any gap between the tax deducted and the tax actually due, for example when a vest pushes your income above £100,000 and into the 60% band

In other words, the payslip deals with the day the shares arrive. The tax on what you do with them afterwards is down to you.

Do you pay Capital Gains Tax when you sell RSU shares?

You may. When you sell shares that have grown in value since they vested, the growth is a capital gain. Your cost is the value already taxed through payroll, so you are only taxed on the increase, not twice on the same amount.

Sell to cover is a sale too

The shares your employer sells at vesting to pay the tax are a disposal for Capital Gains Tax. Because they are sold almost immediately, the gain or loss is usually small, but the sale still counts. It also adds to your total sale proceeds for the year, which matters for the £50,000 reporting limit below.

Selling the shares you keep

Example

James receives 200 shares worth £100 each when they vest. The £20,000 is taxed through his payslip. Eighteen months later he sells all 200 shares for £160 each.

• Sale proceeds: £32,000
• Less the value taxed through payroll: £20,000
• Gain: £12,000
• Less the annual exempt amount: £3,000
• Taxable gain: £9,000
• Capital Gains Tax at 24%: £2,160

Nothing about this sale appears on James’s payslip. He must report it and pay the tax through Self Assessment.

Why your broker’s figures may be wrong

UK rules match shares in a set order: same day sales first, then shares acquired in the following 30 days, then an average cost pool. A new vest within 30 days of a sale is matched to that sale first, which often changes the gain. US brokers use dollar figures and a first in, first out method, and sometimes show a cost of zero, so their gains are rarely right for a UK return.

For 2025/26 and 2026/27, the first £3,000 of gains is tax free, and gains above that are taxed at 18% or 24%. If you are registered for Self Assessment, sales with total proceeds over £50,000 must be reported even if no tax is due. If shares fall below their vesting value, claim the loss within four years so it can reduce future gains.

Are dividends from US shares taxable in the UK?

Yes. Many US listed companies pay dividends every quarter, and as a UK resident you are taxed on them in the UK. These dividends are foreign income, so they never pass through UK payroll.

The US normally withholds tax before the dividend reaches you: 15% if you have a valid W8BEN form with your broker, or 30% if you do not. The form usually needs renewing every three years, so it is worth checking your broker account.

In the UK, the first £500 of dividends is covered by the dividend allowance. Above that, dividends are taxed at these rates:

• Basic rate taxpayers: 8.75% for 2025/26, rising to 10.75% from 6 April 2026
• Higher rate taxpayers: 33.75% for 2025/26, rising to 35.75% from 6 April 2026
• Additional rate taxpayers: 39.35% in both years

You can usually claim Foreign Tax Credit Relief for the 15% US tax already paid, but only by reporting the dividends on the foreign pages of a tax return. Dividends that are automatically reinvested in more shares are still taxable, and the reinvested shares become part of your share pool.

Is interest on cash in your brokerage account taxable?

Yes. Cash left in your brokerage account, from share sales or dividends, is often swept into an interest paying account or money market fund. That interest is taxable in the UK as savings income.

Your personal savings allowance covers some interest: £1,000 for basic rate taxpayers, £500 for higher rate taxpayers and nothing for additional rate taxpayers. The difficulty is that a US broker does not report interest to HMRC in the way a UK bank does, so it is not collected through your tax code. If the interest is taxable, it normally needs to go on a tax return.

This will matter more in future: savings income tax rates are due to rise by two percentage points, to 22%, 42% and 47%, from April 2027.

When do you need a Self Assessment tax return?

Even with your RSUs taxed through payroll, you will usually need a return if, in the tax year, you:

• made a gain above the £3,000 annual exempt amount on selling shares
• are registered for Self Assessment and your total share sale proceeds exceeded £50,000
• received foreign dividends that, with any UK dividends, came to more than £500
• earned taxable interest on cash held with an overseas broker
• want to claim a capital loss or Foreign Tax Credit Relief

If you have not filed before, you must register by 5 October after the end of the tax year, then file and pay by 31 January. For the 2025/26 tax year, that means 31 January 2027.

Quick checklist: is your payslip the whole story?

If any situation below applies, your payslip is not the end of your tax position.

• Sold any shares, including sell to cover
  • Trigger: gains over £3,000, or proceeds over £50,000 if registered
  • Action: prepare a UK Capital Gains Tax calculation
• Shares fell below their vesting value
  • Trigger: a sale at a loss
  • Action: claim the loss within 4 years of the tax year end
• Received US dividends
  • Trigger: total dividends over £500
  • Action: report on the foreign pages and claim credit for US tax
• No W8BEN on file
  • Trigger: 30% US tax deducted from dividends
  • Action: complete the form with your broker
• Cash sitting with your broker
  • Trigger: interest above your savings allowance
  • Action: report the interest on your return
• Vest took your income above £100,000
  • Trigger: personal allowance reduced
  • Action: check your tax code and consider pension contributions

Appoint TaxQube to manage your RSU taxes

Being a regulated firm of specialist tax accountants supervised by ACCA, we look after a large number of employees of US listed companies. We keep your share pools up to date in sterling, calculate gains under UK matching rules rather than broker figures, and report your dividends and interest with the correct foreign tax credits.

We work proactively. We start your return as soon as the tax year ends, so you know your tax bill well before 31 January.

Unlike some firms, we do not take a share of your tax savings; you keep 100% of them. We charge an all inclusive monthly retainer with no additional invoices, giving you year round access to qualified tax advisers.

If your RSUs are taxed through payroll but you have sold shares, received dividends or hold cash with your broker, contact us for a free initial consultation.

Frequently asked questions

My RSUs are on my payslip. Do I still need to file a tax return?

Possibly. Payroll only taxes the value of the shares when they vest. If you sell shares at a gain, receive dividends above the allowance, or earn interest on cash with your broker, you will usually need a return.

Do I need to declare sell to cover shares?

Yes, they are a sale for Capital Gains Tax. The gain is usually small, but the proceeds count towards the £50,000 reporting limit if you are registered for Self Assessment.

Will I pay tax twice on my RSUs?

No, provided the sale is calculated correctly. The value taxed through payroll becomes your cost, so only the growth after vesting is taxed as a capital gain.

Can I use my broker’s gain figures on my UK return?

Usually not. US brokers use US matching rules and dollar figures. UK returns need the UK matching rules and sterling values at the date of each vest and sale.

Do I pay UK tax on US dividends if US tax has already been taken?

Yes, but you can normally claim credit for the US tax, up to 15%, against the UK tax due. You only pay the difference.

Is interest on cash in my brokerage account taxable?

Yes. It is savings income. Because overseas brokers do not report it to HMRC through your tax code, it usually needs reporting on a tax return.

What if my shares fall in value after vesting?

The income tax paid through payroll does not change. If you sell for less than the vesting value, you have a capital loss, which you can claim within four years to reduce future gains.

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We help taxpayers in the UK to ensure compliance with HMRC – It is a legal responsibility. If you need help in submitting your Tax reports or accounts preparation, please do feel free to get in touch with us by completing the contact us form.

This article is general guidance based on HMRC rules for the 2025/26 and 2026/27 tax years and is not advice for your specific circumstances. Please speak to a qualified adviser before acting.