Shares from your employer: RSUs, ESPPs and your tax return

You get shares from your employer — restricted stock units (RSUs) that vest, or shares bought through an employee share purchase plan (ESPP) — and you want to know what has already been taxed, what the shares cost you for tax purposes, and what happens when you sell them.

Two taxes can apply, at different times. Income Tax and National Insurance can arise when you get the shares, because they are a reward for your work. Capital Gains Tax can arise later, when you sell or otherwise dispose of them.

gov.uk names four schemes with tax advantages, under which you do not pay Income Tax or National Insurance: Share Incentive Plans, Save As You Earn (SAYE), Company Share Option Plans and Enterprise Management Incentives (EMIs). Shares you are given outside them come through 'non-tax advantaged' schemes: 'acquisition schemes', which give free or discounted shares, and 'share option schemes', where you can buy shares. Your plan documents say which kind of scheme yours is.

RSUs. HMRC's manual describes an RSU award as normally an agreement to issue shares when the award vests — once conditions such as a period of employment have been met. No shares are delivered before then. Where an award delivers shares, the charge to Income Tax arises when you acquire them on vesting. The manual adds that the facts of a particular award, rather than its label, decide how it is taxed.

Payroll. For shares from a non-tax advantaged scheme, gov.uk says you need to report the Income Tax and National Insurance on a Self Assessment return if your employer does not deduct them through payroll. Where your employer did deduct them, that part has already been taxed.

What the shares cost you. When you sell, your gain is worked out from the cost of the shares for Capital Gains Tax. HMRC helpsheet HS287 sets this out. If you exercise a share option, the cost is what you paid for the option (if anything), plus the price you paid for the shares, plus the amount chargeable to Income Tax on the exercise. If, because of your job, you get free or cheap shares outside an approved scheme and not by exercising an option, the cost is generally their market value on the date you get them. Because the amount taxed as income forms part of the cost, it is not counted again in the gain.

Selling. Shares of the same class in the same company are matched in the order HS284 sets out: first shares acquired on the same day as the sale, then shares acquired in the 30 days after it, then the 'Section 104 holding', which pools the rest at their average cost. HS287 adds that shares you cannot dispose of freely because of restrictions from your job are treated as a separate class until the restrictions are removed.

You need to report and pay Capital Gains Tax if your total taxable gains for the year are above the tax-free allowance of £3,000. If you are registered for Self Assessment you may need to report gains below the allowance too, when the total you sold assets for is over the limit gov.uk sets. gov.uk: work out if you need to pay →

Shares in a US company are bought and sold in dollars; each amount is converted into pounds at its own date. The guide on US shares explains how. US shares and UK tax →

• Your grant or plan documents, showing what type of scheme it is.
• The vesting or purchase confirmation for each lot of shares: the date, the number of shares, their market value and any price you paid.
• Your payslips for the months shares vested or were bought, showing what went through payroll.
• Broker statements for every sale: the date, the number of shares, the proceeds and the fees. Shares sold straight away at vesting, for example to cover tax, are sales too.
• Your record of earlier purchases and sales in the same company, which set the average cost of your Section 104 holding.

Gains go on the Capital Gains Tax summary pages (SA108). Shares in a company listed on a recognised stock exchange go in the 'Listed shares and securities' section — boxes 23 to 30 on the 2025 to 2026 pages.

The SA108 notes say to fill in those pages if your chargeable gains before losses were more than the £3,000 annual exempt amount, if the chargeable assets you disposed of were worth more than the limit the notes set, or if you want to claim an allowable loss or make a claim or election for the year.

Income Tax and National Insurance on the shares that did not go through payroll is reported on the return as well. HS287 points to the SA101 Additional information notes for the Income Tax side of employee shares.

Taxseas covers:

• Employment (PAYE) income
• Capital gains — shares, funds & crypto

Upload the documents above in any format and Taxseas reads what it needs. You see every figure Taxseas extracts and can adjust anything that is off. Today, Taxseas prepares your complete, reviewed return and gives you the exact figures to enter in your HMRC online account. See what Taxseas covers →