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by Marazan 3903 days ago
If they hold them for 5 years there is no Cap Gains tax to be paid on the shares.

Arguing that the tax employees pay should be taken into account when calculating a companies tax provision lacks merit. That's employees tax not the companies - this is especially true for companies such as Starbucks where if they were not monopolising high street space by abusing the tax system and small local coffee shop would happily take their space in a fungible manner meaning the employee tax payments would still take place and there would be no net loss for Starbucks not existing.
2 comments
ropiku 3903 days ago
The cap gain is only paid on the profit made when selling. RSUs are taxed as regular income when they are awarded. Most likely the employees are high rate tax payers so it comes out at 40-45% tax + National Insurance.
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spacecowboy_lon 3903 days ago
Sorry what is this RSU you speak of? tax on employee share options is quite different in the UK to the USA.

With a HMRC approved scheme CGT effectively goes away and you only pay CGT after your yearly allowance and only on a real gain - no massive tax bill on underwater share options.

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kd5bjo 3903 days ago
An RSU is more like a stock grant than a purchase option -- the company provides shares of stock to its employees according to a vesting schedule. The fair market value of the shares at the time of vesting is considered income, and there is no cost to the employee (other than income taxes).

I don't know if this is a US-only arrangement, or if it's used in other countries as well.

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ropiku 3903 days ago
The other repliers added more info, sorry.

You are correct about share options, on which your gain is only the price difference for which you pay CGT (or not). But the liquid tech companies (Google, FB, Twitter) give out direct stock which is taxed on their Fair Market Value at the time of vesting. RSUs are taxed the same way both in UK and US.

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drited 3903 days ago
RSU = restricted stock unit whether you're in the UK or the USA.
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spacecowboy_lon 3902 days ago
Never heard of RSU's in the UK context - UK taxation depends on if its an approved scheme or not.
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drited 3903 days ago
'If they hold them for 5 years there is no Cap Gains tax to be paid on the shares'

Why not?

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