RSUs in the UK: A Comedy of Taxes, Tears, and "Share Pools"

So you have just received RSUs from your employer - congratulations!

You are now the proud owner of Restricted Stock Units, which is corporate-speak for "You might get shares... eventually... if you behave."

But as any British taxpayer knows, the real star of the show here is not the shares themselves - it is His Majesty's Revenue & Customs, waiting behind the curtain like a patient seagull with chips.

Let us walk through what happens, using humour as emotional support.

Act 1: The RSUs Vest - and HMRC Says "Cheers, I’ll Take My Cut Now"

In the UK, RSUs are taxed as employment income the moment they vest (that is, when you actually receive the shares).This is essentially HMRC saying

"Oh, you got something nice? Lovely. That is taxable."

At vesting, the value of the shares becomes subject to:

• Income Tax, and

• Employee National Insurance Contributions (NICs)

Your employer usually sells some of the shares to cover this tax - a process known as "sell to cover", or as employees call it:

"Why are half my shares missing??"

If you are lucky, the remaining shares go into your name.If you are unlucky, you check the stock price a week later.

Act 2: The Share Pool - Not a Swimming Pool, Unfortunately

Once your RSUs vest and you hold shares, they enter something delightfully called a share pool.

A share pool is not a relaxing oasis of equity.It is an administrative bucket HMRC uses to track:

• how many shares you have acquired,

• how much you paid for them (your "base cost"), and

• your sanity.

Whenever you obtain new shares (for example, future RSU vesting events), they get added to your pool. Whenever you sell shares, you take shares out of the pool using the "Section 104 pooling rules", which sounds like a magical spell but is actually just tax maths.

Think of your share pool like a big pot of soup.Every time you add shares, you stir.Every time you sell, you scoop.And HMRC watches to make sure you do not spill.

Act 3: You Sell the Shares - Now Capital Gains Tax Arrives

Once you have paid the income tax at vesting, your shares are officially "yours", which means any increase in value between vesting and selling is subject to Capital Gains Tax (CGT).

This is the government’s way of saying:

"Congrats on holding onto your shares long enough for them to go up in value - now give us a slice."

Key points about CGT on RSUs:

• Your base cost is the price at vesting (because you already paid income tax on that).

• Any gain above that is taxed

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You also get an annual CGT allowance... which the government keeps shrinking, like an unattended laundry load in the dryer. (It is £3,000 as of 2024-25).

A Simple Example (Featuring Mild Financial Anxiety)

You receive 100 RSUs. They vest at £10 each.

At vesting:

• Value = £1,000

• HMRC: "That is income tax, please."

• Employer sells, say, 40 shares to cover tax

• You keep 60

Share pool now contains:60 shares, base cost £10 each

Later, you sell your 60 shares at £15:

• Gain = £5 per share

• Total gain = £300

CGT applies (after allowance).

HMRC: "Nice little gain you made there - would be a shame if someone... taxed it."

How I Can Help You Prepare and Calculate Your Share Pool

Working out your share pool is not difficult, but it is the kind of calculation that can make you question all your life choices.

Here is how I can help:

1. Organising your RSU history

You can give me:

• each vesting event

• number of shares vested

• vesting price

• how many were sold for tax

• any later sales

I can turn this into a clean, structured list or table.

2. Building your Section 104 share pool

I can calculate:

• total number of shares currently in the pool

• total pooled cost

• average cost per share

• adjustments after each sale

• the remaining pool after each transaction

Basically, I stir the tax soup for you.

3. Computing capital gains for any sale

Just tell me:

• how many shares you sold

• at what price

• on what date

I will:

• apply the HMRC share matching rules (same day, 30 day rule, then pool)

• calculate your gain or loss

• show you a breakdown you can use in your tax return

• express sympathy if the numbers make you emotional

4. Explaining what everything means

If you want the accountant-style explanation, I can do that.If you want the "explain it like I am a caffeinated squirrel" version, I can also do that.

Final Thoughts: How to Emotionally Survive RSU Taxation

• Do not panic. Only the first tax bill feels like being hit with a wet fish.

• Remember vesting = income tax. It is not optional. HMRC collects their share before you even figure out what RSU stands for.

• Keep track of your share pool. It is less fun than a real pool, but also less likely to give you athlete’s foot.

• CGT only applies when you sell. Which you should do eventually, unless you enjoy refreshing the share price every 14 minutes.