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Say I had 100 RSUs granted, and when vesting shares trade at $10. My employer will aim to withhold 54.59% to cover income tax/employee NIC/employer NIC.

The following day, when my employer actually sells the shares, the shares trade at $9. Given that (100 * $10 * .5459)/$9 = 60.6, my employer sells 61 shares to cover taxes. The extra .4 share proceeds, .4 * $9 = $3.6 will be refunded to me via my regular payslip.

Given the price difference between the $10 used for tax purposes, and the $9 price during the disposal, can I claim a ($10 - $9) * 61 = $61 capital gain loss? I looked up the HMRC's website but couldn't find a definitive answer.

For the purpose of this question, let's ignore the need to convert USD to GBP for tax purposes which follows it own rules and are irrelevant here.

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At the time after the first two paragraphs, you own 39 shares with a cost basis of $10 per share. Shares sold for less that that, are a loss for tax purposes.

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  • That I understand (cost basis for the 39 shares = $10/share, ignoring share matching rules for simplicity). What I'm curious about is whether I can claim a CGT loss on the 61 shares that were sold at $9 'instead of' $10?
    – foo
    Aug 24, 2021 at 11:06
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    @foo the steps your employer takes sound a bit odd. Why don't they just sell 54.59% of the shares (rounding up) and deliver the rest to you? Doesn't the cost basis arise at delivery, when it becomes possible for them to be sold? In my last job there was typically two months between vesting and delivery partly due to closed trading periods, and I'm pretty sure I was taxed based on the price at the delivery date.
    – GS - Apologise to Monica ♦
    Sep 23, 2021 at 14:09
  • @GS-ApologisetoMonica it did seem odd to me to. I think the reasoning is that they use the closing price as the cost basis for income tax, but obviously there's a price difference between that closing price and when they sell the RSUs the following day. If I was to design the system myself I'd do what you describe (sell ceil(54.59% of RSUs) and give the proceed to HMRC to cover income tax/NI obligations, give the remaining shares to the employee, without any capital gain/loss; ignoring the rounding of the extra sold share for simplicity)
    – foo
    Oct 4, 2021 at 9:43

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