RSU Tax UK 2026/27 — How Restricted Stock Units Are Taxed at Vesting

When a typical UK Restricted Stock Unit (RSU) becomes an acquired, readily convertible employment-related security, its taxable value is generally treated as employment income and PAYE and employee National Insurance may apply. The precise charge and payroll mechanism depend on the plan terms, the security and whether it is readily convertible. An employer may arrange sell-to-cover or another deduction method, but you should check the award documents and payslip rather than assume every plan works identically. The employer’s Class 1 secondary NI is normally 15% for category A in 2026/27, subject to the applicable category and thresholds; it is an employer cost, not automatically a deduction from your shares. Use the UK RSU Vest Tax Calculator for an estimate of incremental UK payroll deductions at vesting; it does not determine your award's legal or tax treatment.

This guide covers the vesting charge, what you actually keep, the CGT position when you sell, and when Self Assessment becomes necessary.

The Vesting Charge — The Numbers

A software engineer earning £55,000 with a £15,000 RSU grant acquires 300 shares at £50. If the entire award falls into the higher-rate band and the award is handled through category A payroll, the illustration is 40% Income Tax plus 2% employee NI — about 42% before any plan-specific adjustments. A sell-to-cover instruction at that rate would represent about £6,300, leaving an indicative 174 shares worth £8,700; the actual number depends on payroll, rounding and execution price. The gross value may also create employer NI at the applicable rate, normally 15% for category A in 2026/27, which the company pays.

What Happens When You Sell

For a straightforward fully taxed award, the acquisition cost normally includes the amount charged to Income Tax. Sell 174 shares at £55 instead of £50: proceeds of £9,570 minus an illustrative acquisition cost of £8,700 leaves a gain of £870 — inside the £3,000 annual exempt amount, so no CGT is due. Gains above the allowance are taxed at 18% where they fall within the basic-rate band and 24% above it in 2026/27, subject to the share-pooling and matching rules.

If you hold unvested RSUs, do not assume that grant itself creates the same charge as acquisition: the employment-related-securities rules and award terms determine the chargeable event. In a typical nil-cost RSU plan, the main event is acquisition/vesting, followed by dividend income if the shares pay dividends and CGT on a later disposal. Some employers also deduct PAYE from salary where sell-to-cover is not in place, so check the payslip and plan documents.

Self Assessment Reporting

Even when PAYE has withheld the right amount, a share disposal, foreign income, untaxed dividends or another HMRC criterion can still require Self Assessment. Use HMRC’s checker for the relevant tax year. Where notification is required, the usual deadline is 5 October after the end of the tax year; the online return and balancing payment are usually due by 31 January after that tax year. Capital gains may instead be reportable through HMRC’s real-time service by 31 December in the following tax year, with payment by 31 January.

Planning Your Sales

Because RSU acquisition is usually an employment-income event, the main planning lever is the disposal side. Spread sales across tax years to use the £3,000 allowance each year; consider an eligible ISA transfer or bed-and-ISA route; offset allowable capital losses; and remember that 2026/27 CGT is 18% or 24%, not 10% or 20%. If you expect to sell a large block, calculate how the gain interacts with your unused Income Tax basic-rate band and the share-matching rules.

Vesting Mechanics and Band Planning

The marginal rate that applies to the RSU value depends on where your salary ends. A £40,000 salary with a £10,000 vesting keeps part of the value inside the £50,270 threshold, so a slice is taxed at 20% with 8% NI — a blended rate below the headline 42%. A £55,000 salary means the entire vesting sits in the higher band at 40% plus 2% NI. The same £35,000 grant produces different withholding for a £50,000 and a £52,000 earner, so never assume your headline band — compute where the vesting value actually lands.

Because vesting dates are fixed in advance, the planning opportunities sit in the rest of your affairs. If your salary plus vesting will breach £100,000, the Personal Allowance tapers by £1 for every £2 over — so a £110,000 combined income loses £5,000 of allowance, an effective 60% marginal rate on part of the vesting. Pension contributions in the same year reduce adjusted net income and can restore the allowance, and salary sacrifice before vesting can lower the salary base that pushes the RSU value into a higher band. Where your employer offers a choice of vesting frequency, quarterly vesting spreads the income across more pay periods and can smooth your NI position, though the annual tax result is unchanged.

Dividends, Employer Costs and the Broker Process

Once shares are deposited, the RSU's employment chapter generally closes and it behaves like any other holding. Dividends paid on the shares are covered by the £500 dividend allowance and then taxed at dividend rates — they do not reopen the employment income. The broker's account fees are personal expenses and not usually deductible. Employer NI at normally 15% for category A in 2026/27 is a cost to the company, which is why many employers consider RSUs expensive and why a large grant can influence package negotiations.

The broker process also has a rhythm worth understanding. Sell-to-cover sales typically execute within days of acquisition, so the cash that funds your tax is realised at a price close to, but not identical with, the valuation used by payroll. The difference can affect the number of shares deposited. Check the execution price on the broker statement against the payroll records and ask the employer or broker about any material discrepancy.

What to keep for a UK RSU record

Save the award agreement, vesting notice, market-price method, payslip, tax code, share quantity, withholding instruction and broker settlement. The award agreement explains the conditions, while the payslip shows how the employer operated PAYE and employee National Insurance. The broker statement shows what was actually delivered or sold. None of those documents should be discarded simply because the employer says the tax was handled.

Reconcile the gross value rather than only the net shares. Start with the shares acquired multiplied by the relevant value, then compare the payroll deductions, sell-to-cover proceeds, broker fees and number of shares deposited. Small differences can come from execution price, rounding, currency conversion or the employer’s payroll timing. A difference that cannot be explained should be raised before filing a return or selling the remaining shares.

If the award is internationally mobile, identify where the employment duties were performed between grant and vest, which country withheld tax, and whether the employer issued a local reporting document. Residence on the vest date is not the only fact that can matter. A UK payroll entry may not settle a foreign liability, and foreign withholding does not automatically become a UK credit without the relevant treaty and evidence.

Before a later sale, separate three records: the employment income at acquisition, the capital-gains disposal, and any dividends received after the shares were deposited. A broker’s annual tax report may combine these events or use a platform-specific cost display. Classify each transaction by event and retain the original trade confirmations. If shares move between brokers, download the lot and acquisition history first.

The most useful planning question is not “what percentage is RSU tax?” but “what cash and shares will remain after the vest, and what future tax event will the sale create?” Model the vest month, a lower sale price, a higher sale price, pension contributions, ISA transfers and the effect of a large disposal on the tax year. Keep the assumptions dated because rates, allowances and plan terms can change.

Frequently Asked Questions

Estimate incremental UK payroll deductions at vesting with the UK RSU Vest Tax Calculator, then read the RSU Sell-to-Cover guide for the withholding mechanics and the Share Schemes UK guide to compare SAYE, CSOP and EMI alternatives. The calculator does not model those schemes or a later share sale.

Official sources

• HMRC Employment Related Securities Manual: RSUs
• GOV.UK: How employment-related securities work if you’re an employer
• GOV.UK: Rates and thresholds for employers 2026 to 2027
• GOV.UK: Capital Gains Tax rates
• GOV.UK: Employee share and security schemes and Capital Gains Tax — HS287
• GOV.UK: Register for Self Assessment

This guide is general educational information for the UK 2026/27 tax year. It is not tax, investment or legal advice and does not determine the treatment of a particular RSU plan.