Executive Summary
When are RSUs taxed in the UK?
RSU-like employment awards are generally taxed as earnings when shares are acquired or when there is no longer a substantial risk of forfeiture—subject to PAYE withholding and NIC rules. Exact timing follows plan terms and Chapter 5 ITEPA mechanics.
What is EMI?
The Enterprise Management Incentive (EMI) is a tax-advantaged option scheme for qualifying small companies meeting HMRC tests. It can reduce income tax and NIC exposure compared with unapproved options if all conditions are satisfied.
Do Scottish taxpayers pay different tax on equity?
Scottish income tax rates and bands can differ from the rest of the UK. Employment income from equity is still employment income, but the applicable income tax rates depend on residency in Scotland versus elsewhere.
The UK’s PAYE system expects employers to withhold tax on most cash and share settlements. Large vest events can still create under-withholding if progressive bands are breached.
Pair with United Kingdom country overview and relocating with equity. US readers: ISO vs NSO, AMT.
The bottom line: Identify whether your award is EMI, CSOP, SAYE, or unapproved before exercise—labels on Carta may be wrong.
London vs Dublin: If you compare UK vs Ireland, read Ireland KEEP—SME options vs Big Tech RSUs are different worlds.
London vs Paris: See France guide for continental contrasts on social charges.
Critical Warning: NIC employer liability can change whether employers push net settlement or sell-to-cover.
Approved vs Unapproved Schemes
| Category | Examples | Planning theme |
|---|---|---|
| Approved | EMI, CSOP, SAYE | Narrow eligibility, potential relief |
| Unapproved | Many US parent plans | Spread often taxed at exercise |
Income Tax and NIC at Exercise
For many unapproved options, income tax and NICs apply to the discount or spread at exercise or acquisition.
RSUs and Share Acquisition
Economically similar to RSU guide. PAYE must capture FMV in most cases.
Scottish Taxpayers
If you live in Scotland, check Scottish bands each tax year—they change independently of rUK.
Cross-Border: Ireland, EU, US
Non-US sourcing, Ireland KEEP for comparison.
US Citizens in the UK
| Topic | Notes |
|---|---|
| FTC | Form 1116 |
| ISO | AMT may differ from UK timing |
M&A, IPO, Secondaries
Divorce and Home Buying
Practical Examples (GBP)
Example A: Unapproved option exercise
- Spread £60,000 → earnings subject to IT + NIC (conceptual)
Example B: EMI-qualified exercise
- Potentially favorable outcomes if all tests met
Compliance Checklist
- ☐ P60 / P45 vs broker
- ☐ SA100 if needed
- ☐ FX for USD parents
ESPP
Cost Basis
Common Mistakes
- Assuming US ISO rules apply to UK payroll.
- Ignoring Scottish tax bands after moving to Edinburgh.
- Missing SA100 reporting when PAYE under-withheld.
- Failing to document FX for USD parents.
Record Retention
Keep P60s, grant PDFs, broker statements, 6 years minimum.
Post-Acquisition Sales and CGT
After employment tax and NIC on acquisition, later disposals may fall under UK capital gains rules for individuals—annual exemption and rates change with budgets. Track base cost from amounts already taxed as earnings to avoid double taxation.
Executives and 10b5-1
If you are listed company personnel, read 10b5-1—UK MAR and US Rule 10b5-1 are different but both constrain sale timing.
Footnotes
Disclaimer: Educational only—not UK tax advice. Consult an HMRC-aware tax adviser.
Primary Sources
| Source | URL |
|---|---|
| GOV.UK / HMRC | gov.uk |
Last Updated: March 2026 | Research Team: VestingStrategy