RSUs can be heavily taxed

A lot of people hear “£45,000 in stock” and picture a mini jackpot, but in a United Kingdom payroll system that grant can land like an ordinary bonus with extra deductions attached. HM Revenue and Customs treats most restricted stock units as employment income when the shares vest, not as some separate tax-free reward. (gov.uk 1) (gov.uk 2) That means the tax hit usually arrives on vesting day, which is the day the shares actually become yours. If your employer has fully taxed the award through Pay As You Earn, the amount normally already shows up on your P60 just like salary. (gov.uk) In England, Wales, and Northern Ireland in the 2025 to 2026 tax year, ordinary income above £50,270 is taxed at 40%, and income above £125,140 is taxed at 45%. The standard tax-free personal allowance is still £12,570, and it starts shrinking once income goes above £100,000. (gov.uk) National Insurance sits on top of that. For employees in 2025 to 2026, Class 1 National Insurance is 8% on earnings between £12,570 and £50,270, then 2% above £50,270. (gov.uk) Student loan repayments can make the gap feel even bigger because payroll takes them at the same time as tax and National Insurance. For Plan 2 borrowers from 6 April 2025 to 5 April 2026, the repayment threshold is £28,470 and the deduction rate is 9% of income above that line. (gov.uk 1) (gov.uk 2) Postgraduate loans add another layer. The government’s 2025 to 2026 student loan guide says postgraduate borrowers repay 6% of income above the postgraduate threshold, and employers collect that through payroll alongside tax and National Insurance. (gov.uk) Now put those pieces together on a vesting event. If £15,000 of stock vests in one year from a £45,000 grant spread over three years, that £15,000 can stack on top of salary, push more income into higher-rate tax bands, trigger National Insurance, and increase student loan deductions in the same payslip. (gov.uk) (gov.uk) (gov.uk) That is why two employees with the same £45,000 headline grant can end up with very different cash outcomes. A worker already near £50,270 gets more of each vest taxed at 40% income tax, while a worker under that line may lose more at 20% income tax instead. (gov.uk) There is another catch after vesting. Once the shares are yours, any later rise in value is no longer salary tax territory but can become capital gains tax territory when you sell, using the market value at vesting as your starting cost basis. (gov.uk) Some plans are kinder than others, but restricted stock units usually are not the tax-advantaged schemes people read about in startup folklore. The United Kingdom has separate tax-advantaged share arrangements, while ordinary employment-related securities are generally taxed under the normal earnings rules unless a special relief applies. (gov.uk) (gov.uk) The practical lesson is boring and expensive: model the vest by tax year, not the grant by headline number. A £45,000 promise can be worth far less in spendable cash once Pay As You Earn, National Insurance, and student loan payroll deductions all take their slice. (gov.uk) (gov.uk)