If your global group offers share-based rewards to employees — such as Restricted Stock Units (RSUs), Share Options, or Phantom Share Plans — it’s essential to understand the UK tax and payroll implications for your UK-based workforce. Schemes designed overseas, particularly in North America, often benefit from generous tax treatment in their home jurisdiction. Unfortunately, these advantages rarely apply in the UK.
We work exclusively with multinational groups headquartered outside the UK, helping them manage the UK tax and payroll reporting for their global share plans. This is not a one-off issue for us — it’s a routine part of our services.
Some schemes require the employee to cover the employer’s NICs. If so:
The taxable value is the market value of the shares on vesting, less any amount the employee paid for the shares.
Once the shares vest:
For US-style incentive stock options (ISOs), the UK deems these non-qualifying for tax advantages. Any gain from grant to exercise is taxed as income, not capital.
If the scheme includes a right to receive shares, it may be taxed under share plan rules — even if the employer reserves the right to pay in cash. HMRC will look at:
If it’s likely that the employee expects shares, it may be taxed as a right to acquire securities.
If the shares are:
…then you must operate UK PAYE (Pay As You Earn) via the payroll. PAYE is the UK system for collecting income tax and NICs directly from employee wages. You must report the market value of the shares at vest or exercise, less any amount the employee paid for the shares.
Where shares are stock-listed, companies often sell a portion of the vested shares on behalf of the employee to cover the tax and NICs. This must be carefully managed and reported via the payroll.
If the shares are not listed on a stock exchange:
Determining the market value of non-listed shares can be complex. You’ll need a qualified share valuation expert to assess the value at vesting or exercise.
We will:
No. The UK has its own rules, which often differ. Most overseas schemes do not qualify for UK tax advantages.
If shares are stock-listed and freely tradeable — yes. PAYE must be operated on the market value at vesting or exercise.
The employee must self-assess and pay the tax. You must still provide them with the market value of the shares. You’ll likely need a professional valuation.
Some schemes transfer the employer’s NIC liability to the employee. This reduces the taxable amount for income tax purposes but not for employee NICs.
Yes, pension contributions can be an effective way to lower your tax bill, especially if RSUs push you into the 60% tax bracket.
Contact us to ensure your UK compliance is watertight when it comes to global share-based rewards. We’ll help you keep your UK employees and HMRC happy — without unnecessary surprises.
Senior Manager
Head of Direct Taxes
Senior Associate
Global Mobility, Personal Tax & VAT
