My client has received restricted stock unit (RSU) grants from their employer while they have been working abroad. They are returning to the UK and will continue to work for this same employer with the RSUs vesting over the following three to four years every March. How will these RSUs be taxed and is there any specific treatment for capital gains tax purposes?

Restricted stock units (RSUs) are a very common part of a remuneration package by US employers. The UK tax treatment of RSUs was uncertain until 6 April 2016 as RSUs were normally taxed under the money’s worth principle, ITEPA 2003, s62.

The position was put beyond doubt from 6 April 2016 that for RSUs, the rules for securities options takes priority over general earnings, ITEPA 2003, s418 (1A) with the explanatory notes from F (No.2) A 2016 here specifically commenting on RSUs and from HMRC’s manuals at ERSM20192.