What are the tax implications for UK citizen selling US shares?

December 7, 2020 7:43 AM

I want to sell my stocks from a US broker account, but how do I work out what I need to do to keep HMRC happy?

I have a UK passport. I work for a US company which provides some compensation in the form of stock grants. My UK tax affairs are simple - PAYE only so I don't have an existing relationship with a tax advisor.

I'd like to sell the US shares which have vested. Do I need to employ a tax advisor? Or can you recommend a simple guide to working out UK capital gains tax?

posted by Tapioca to Work & Money (3 answers total)

Best answer: I hope these aren't redundant questions, but you don't mention that you've tried it:

1) I assume you're over the capital gains tax threshold (£12,300 this tax year)
2) Can you work out what the gain is and pay it immediately?

There's plenty of guidance on the HMRC site on how to calculate it. One thing that you might need to do is to register for Self Assessment if the shares sold for over 4× the capital gains tax threshold (i.e. £49,200).

Hopefully that's straightforward enough to go for it. If not, it's worth finding what the difficult bit is before talking to a tax advisor.

I've not paid capital gains tax, but I am registered for Self Assessment, and it's easy once you're registered.
posted by ambrosen at 11:03 AM on December 7, 2020

Best answer: As I understand it, a taxable gain is the increase in the value of the asset between you acquiring it and you selling it. If you're selling the stock immediately when it vests, then there is no gain there. Your employer should be taxing you at the point of the grant on the value of the grant as part of your PAYE, and so if you sell it immediately, there's no further tax implication.

If you're selling shares which have increased in value since they vested, then that counts as a gain and, if over the threshold, is taxable.
posted by parm at 1:17 PM on December 7, 2020

If you are *given* stock, it is likely to be considered income (and may even be on your PAYE - check with HR to see). If it's a SAYE arrangement then this will be slightly different because it has a tax advantage. HR will probably be able to explain all this to you if you ask.

If you then sell it the capital gains is the difference between what you were given, or what you paid for the stock, and what you sold it for.

You don't actually need to do anything at all until the tax year ends. Then, you will probably need to do a tax return, which you can do online for free. It is so very simple in the UK that it's hard to believe; do not fear it. (US ones are a horror by comparison which is why almost everyone in the US finds help; so the internet is full of 'argh tax' commentary that isn't relevant to you.)

You *can* fill your tax return immediately the tax year ends (April 6), but the deadline for filing it is give-or-take six months later, so you can read it, make an attempt, and if it all goes pear shaped you can then go find help. You certainly don't need a tax person just yet.
posted by How much is that froggie in the window at 1:48 AM on December 8, 2020