Share options, RSUs and EMI shares can be valuable but the tax is genuinely confusing. We work out what is taxed as income and what as capital gains, and make sure it is all reported correctly so you keep what you have earned.
Share Options & RSUs
Employee share schemes are taxed in layers. With RSUs and most options, the value at vesting or exercise is taxed as employment income, often with tax collected through payroll, and any further growth to the point you sell is subject to Capital Gains Tax. Tax-advantaged schemes like EMI are treated more favourably. The interaction of Income Tax, National Insurance and CGT catches many people out.
Your Tax Help Accountants untangles your specific scheme, works out the Income Tax at vesting or exercise and the Capital Gains Tax on sale, uses your annual exempt amount and any reliefs, and reports it all correctly, including on foreign shares where tax may have been withheld abroad. Valuable shares, taxed once and correctly.
The most common share-scheme mistakes are paying tax twice, once as income and again in full on sale instead of only on the growth, and missing that EMI and other advantaged schemes are taxed far more favourably. Getting the layers right saves real money.
The Detail That Matters
Employee share awards, options, RSUs and share schemes, can be taxed as income, as capital gains, or both, depending on the scheme and the timing. Approved schemes are highly tax-efficient; unapproved ones can create large, badly-timed bills if not planned for.
Tax-advantaged schemes like EMI, SAYE and Share Incentive Plans can deliver gains taxed only as capital (often with Business Asset Disposal Relief on EMI), whereas unapproved options and RSUs are usually taxed as income on exercise or vesting, at up to 45% plus National Insurance.
With RSUs, tax is due as they vest, on the share value at that date, whether or not you sell, which can leave you owing tax on shares you have not cashed in. Planning to sell enough to cover the tax avoids a cash-flow shock.
Once taxed as income, any further growth from that point is a capital gain when you sell, using your £3,000 exemption and 18%/24% rates. Keeping the two stages separate avoids double-counting.
EMI options are especially generous: no income tax on grant or (usually) exercise, and gains potentially qualifying for the 14%/18% Business Asset Disposal rate. For employees of qualifying companies, this is very valuable.
The classic RSU trap is owing income tax on the full vesting value while holding the shares, then watching the price fall, leaving you taxed on value you never realised. Planning the sale-to-cover is essential.
Key Figures
How We Help
We work out the Income Tax and National Insurance on the value of RSUs or options at vesting or exercise, and check what payroll has already collected.
When you sell, only the growth since vesting is taxed as a capital gain. We calculate it, use your annual exempt amount, and make sure you are not taxed twice.
Tax-advantaged schemes such as EMI are taxed far more favourably. We identify your scheme type and apply the right, lower treatment.
All the forms, calculations and correspondence handled on your behalf, so you never have to decode HMRC's rules or sit on hold.
A clear fixed fee quoted after a free call, your position explained in plain English, and never a surprise bill.
We act quickly, and where earlier years are involved we put those right too, reclaiming refunds or minimising penalties.
Share schemes are widely misunderstood, leading people to overpay by being taxed twice or to miss favourable EMI treatment, and foreign shares add withholding-tax complications. We get every layer right so valuable shares are not eroded by tax mistakes.
Recent Client Outcome
An employee received RSUs that vested at a value of £40,000 and did not realise income tax was due immediately, before any sale.
What we did. We confirmed the income tax and National Insurance charge arising on vesting, arranged a sale of enough shares to cover it, and set the vesting value as the base cost for future Capital Gains Tax on the rest.
The outcome. The tax was funded from the shares themselves rather than their own cash, and when they later sold the remainder, only the growth since vesting was taxed as a capital gain within their exemption.
Understanding that RSUs are taxed at vesting, not sale, let them plan the cash and avoid being caught owing tax on unsold shares.
Why People Come to Us
Questions Answered
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