Are you an NRI in the UK receiving Restricted Stock Units (RSUs) from your employer?
Global tech firms like Amazon, Meta, Microsoft, Google, and Intel offer RSUs as part of compensation, but many professionals struggle with the complex UK–India tax implications.

This blog explains everything NRIs must know about RSU taxation in the UK:

• How RSUs are taxed at grant, vesting, and sale
• What happens if you are a UK resident vs non-resident
• How to avoid double taxation with India
• The HMRC filing process and deadlines
• Mistakes to avoid and strategies to save taxes

With the right approach, you can maximise your RSU benefits while staying fully compliant with HMRC and Indian tax laws.

What Exactly Are RSUs (Restricted Stock Units)?

Restricted Stock Units are employer-granted shares that vest over time. Unlike stock options, you don’t buy them—once they vest, you own them.

Key features:

• Grant stage → No immediate tax.
• Vesting stage → Shares are delivered; treated as employment income.
• Sale stage → Any profit over vesting price is taxed as capital gains.

Example: Granted 100 RSUs → vest 25 each year → taxed at vesting, then again if sold for a gain.

How RSUs Are Taxed for UK NRIs

1. Grant of RSUs

No tax liability when RSUs are simply granted.

2. Vesting of RSUs (Most Important Stage)

At vesting, RSUs are treated as salary income.

• If you are UK resident, HMRC applies Income Tax + NICs via payroll (PAYE).

Example:
100 RSUs vest at £50 each → £5,000 taxable income added to your payslip.

3. Sale of RSU Shares

Your cost basis = value at vesting.

Selling price above that = Capital Gains Tax (CGT).

• CGT allowance: £3,000 (2025/26).
• Rates: 10% (basic rate), 20% (higher/additional rate).

Example:

• Vesting value: £50/share → £5,000.
• Sale value: £65/share → £6,500.
• Capital gain = £1,500.

RSUs When You Are a Non-Resident in the UK

Non-residents are usually exempt from UK CGT on share sales.

But beware:

• 5-year temporary non-residence rule → if you return to the UK within 5 years, HMRC may tax overseas gains.
• UK property-linked shares → still taxable in the UK.

Double Taxation for NRIs (UK–India RSU Taxation)

Most UK NRIs face RSU taxation in both the UK and India.

• India taxes global income if you qualify as Resident & Ordinarily Resident (ROR).
• Relief is available under the UK–India Double Taxation Avoidance Agreement (DTAA).

How to avoid double tax:

• In India → file Form 67 to claim Foreign Tax Credit (FTC).
• In the UK → claim FTC via Self Assessment.

Correct FTC claims = no double tax on the same RSU income.

RSU Tax Filing Deadlines in the UK (2025/26)

• Register for Self Assessment → October 5, 2025
• Paper return deadline → October 31, 2025
• Online filing deadline → January 31, 2026
• Tax payment deadline → January 31, 2026
• Employer RSU plan reporting → July 6, 2025

Key Documents for RSU Tax Compliance

To file smoothly with HMRC and in India, NRIs should maintain:

• RSU grant letters & vesting schedules
• Vesting statements with cost basis
• Sale transaction reports from brokers
• P60/P45 forms for PAYE records
• Foreign tax payment certificates

Common RSU Tax Mistakes by UK NRIs

• Wrong cost basis (brokers often report £0).
• Forgetting SA109 form (non-resident declaration).
• Overlooking NIC liability when linked to UK work.
• Currency errors (use HMRC exchange rates).
• No Form 67 filing in India → FTC denied.
• Poor record-keeping → penalties and disputes.

Smart Tax Strategies for RSUs

• Sell shares at vesting → avoid CGT on future appreciation.
• Plan residency status → manage whether vesting occurs as UK resident or abroad.
• Track the 5-year non-residence rule if leaving the UK.
• Always claim FTC to avoid double taxation.
• Consult a tax professional if RSUs form a big chunk of your pay.

Conclusion

For UK NRIs, RSUs are a valuable form of compensation but come with layered tax obligations. You’ll face:

• Income tax at vesting
• Capital gains tax on sale (if resident)
• Possible double taxation between UK & India

By understanding HMRC rules, filing SA109, and claiming FTC correctly, you can stay compliant, avoid penalties, and reduce tax outgo.

FAQs: RSU Taxation for UK NRIs

Q1. Do NRIs pay UK tax on RSUs?
Yes—at vesting, RSUs are treated as employment income. CGT applies at sale if you are UK resident.

Q2. Are RSU sales taxed if I leave the UK?
Non-residents are exempt from CGT unless affected by the 5-year rule or UK property-linked shares.

Q3. How to avoid paying tax twice on RSUs?
Use the UK–India DTAA and claim Foreign Tax Credit (Form 67 in India).

Q4. What is the CGT allowance for 2025/26?
£3,000. Gains above this are taxed at 10% or 20%.

Q5. What are the RSU filing deadlines?
Register by October 5, 2025; online filing and payment by January 31, 2026.

At Dinesh Aarjav & Associates, we specialise in cross-border RSU taxation for NRIs. Through our NRI taxation services, from HMRC Self Assessment to Form 67 in India, our team ensures you never pay more than required.