In Louis Daniel Moore v HMRC [2023] TC8806, the First Tax Tribunal (FTT) dismissed a claim that an award of Restricted Stock Units (RSUs) was received as consideration for the disposal of shares in a takeover. The evidence revealed that they were no more than an incentive offered to retain senior employees of the business and as such they were employment-related securities options.

Disgruntled by the fact that his shareholding was capable of being diluted on a company takeover, the employee had negotiated An award of RSUs from his employer and its acquiring company.

RSUs are essentially options to acquire shares at a later, usually pre-determined event or date. There is no tax charge on the grant of an RSU but when RSUs vest and the employee receives shares or cash or both, there is an Income Tax liability. This is collected via PAYE through the payroll.

On the subsequent takeover, the taxpayer made a Capital disposal of his other shares in his employer. He then sought to claim that the market value of the RSUs received was part of the disposal consideration and obtain Capital Gains Tax (CGT) treatment, thus generating a repayment of Income Tax suffered on his vesting RSUs.

HMRC did not agree that the RSUs were related to the takeover consideration but argued that they were Employment-Related. It issued an assessment which the taxpayer Appealed.

The FTT reviewed the tax treatment of RSUs. It found that they fell within the description of employment-related securities options.

A review of the underlying evidence revealed that:

  • The RSU award formed no part of the consideration paid on the takeover.
  • There was no value to the RSUs until they vested.
  • The RSUs were nothing more than an employment incentive to ensure that Mr Moore stayed on in his job.

Finding that they were employment-related and taxable under PAYE when vested, the appeal was dismissed.


Tribunal decisions on RSUs are rare. The tax treatment of these kinds of awards, which are normally, as in this case, taxed as unapproved share options often appears to baffle employees. HR departments need to address this! 

Useful guides on this topic

Restricted Stock Units: tax reporting
How to report Restricted Stock Units for UK tax. I am an employee and my employer has granted me stock units or RSUs. How are they taxed? How do I complete my tax return?

Employee Shares & Employment-Related Securities
What are the tax consequences when a company gives shares to an employee or director? What are employment-related securities? What is best: shares or share options? How do you set up a share scheme?

CGT: Reporting when & how?
How do you report your capital gains? What return do you use? There are different ways for individuals to report capital gains depending on whether you are resident or non-resident, and whether you are in or out of Self Assessment.

CGT: Reliefs, disposal of a business or its assets
Which Capital Gains Tax (CGT) reliefs apply when a person replaces or disposes of an asset used by a business, the whole or part of a business, or shares in a company?

External links

Louis Daniel Moore v HMRC [2023] TC880

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