Employee Share Schemes When Leaving the UK or Living Abroad

For employees of internationally listed companies — increasingly common among globally mobile professionals — equity compensation in the form of share options, RSUs, or share incentive schemes represents a significant element of total remuneration. When that employee leaves the UK, or moves between countries during the vesting period, the tax treatment of those equity awards becomes complex.

This guide covers the main UK share scheme types, how departure from the UK affects each, and the key considerations for internationally mobile employees receiving equity compensation.

The Main UK Scheme Types

Enterprise Management Incentives (EMI). EMI options are granted by qualifying small and medium-sized trading companies to eligible employees. They offer significant tax advantages: provided the options are granted at market value (or the discount is subject to Income Tax at grant), there is no Income Tax on exercise, and only Capital Gains Tax on the eventual sale — potentially at the reduced Business Asset Disposal Relief rate of 18% for 2026/27 (the BADR rate rose from 10% to 14% in 2025/26 and to 18% from 6 April 2026), provided the qualifying conditions are met. EMI options must be granted while the employee is working for a qualifying UK company, but they can be exercised after the employee has left the UK.

Save As You Earn (SAYE) schemes. SAYE allows employees to save monthly for three or five years and use the accumulated savings to buy shares at a discounted option price. The discount is up to 20% of market value at grant. Growth from grant to exercise is free of Income Tax and NIC. SAYE is a statutory scheme with strict rules around eligibility and share purchase.

Share Incentive Plans (SIP). SIPs allow companies to award shares to employees in a tax-efficient way — free shares, partnership shares, matching shares, and dividend shares can all be held within a SIP. Shares held within the SIP for more than five years are generally free of Income Tax and NIC on withdrawal.

Company Share Option Plans (CSOP). CSOP options are granted at market value and, if exercised between 3 and 10 years after grant, any growth in value is free of Income Tax and NIC. Only CGT applies on the eventual sale of shares acquired through a CSOP. From April 2023, the limit was doubled to £60,000 of options per employee.

Unapproved (non-tax-advantaged) share options. Many companies — particularly large multinationals — grant share options outside the statutory UK schemes. These have no specific tax advantages at grant or exercise: the difference between the option price and the market value at exercise is taxed as employment income (Income Tax and NIC) in full at exercise. Any post-exercise gain to sale is a capital gain.

Restricted Stock Units (RSUs). RSUs are not options but conditional awards of shares: the employee is promised shares that will be issued when vesting conditions are met (typically time-based, sometimes performance-based). On vesting, the shares are delivered and the market value at vesting is taxed as employment income (Income Tax and NIC). The employer typically withholds shares to cover the tax liability. RSUs are extremely common in US-listed companies and in global technology businesses.

Leaving the UK: The Time-Apportionment Principle

For share awards or options that vest or are exercisable over a period spanning both UK and non-UK residence, HMRC applies a "time-apportionment" approach. The principle is that the employment income element of the gain is split between UK and non-UK sources based on the proportion of time spent in UK employment during the "relevant period."

The relevant period is typically the period from award (or grant) to vest (or exercise). If, for example, an RSU was granted when you were UK-resident and vests three years later when you have been non-UK-resident for one of those three years, HMRC's position is that two-thirds of the employment income element is UK-sourced and subject to UK tax; the remaining one-third is not UK-sourced.

The non-UK portion of the gain may be taxable in your country of residence at the time of exercise or vesting. This creates a potential for double taxation, which should be mitigated by the applicable double tax treaty — but the interaction between two different countries' rules is complex and requires specialist advice in both jurisdictions.

Employer Reporting: The "Internationally Mobile Employee" Framework

HMRC has specific reporting requirements for employers who have internationally mobile employees with equity awards. Employers must:

• Report shares and options awarded to internationally mobile employees on HMRC's annual employment-related securities return
• Apply the correct apportionment calculation to determine UK-source employment income
• Withhold PAYE on the UK-source element where applicable
• Report to the employee the split between UK and non-UK source components

Many employers struggle to comply fully with these requirements, and the reporting is often incomplete. Employees should not assume that their employer's PAYE deductions correctly account for cross-border apportionment — particularly if HMRC has not been informed of the employee's non-UK residence status.

It is strongly advisable to seek independent tax advice before leaving the UK if you have significant unvested equity awards, and to ensure that both your UK and overseas tax positions are correctly reported and coordinated.

EMI Options: The Grant Requirement

EMI options must be granted to employees of qualifying UK trading companies who are working for that company for at least 25 hours per week (or, if less, 75% of their total working time). The grant must take place while the employee meets the working time test.

If you are granted EMI options while UK-employed and then move abroad — ceasing to work primarily for the UK company — the options can generally still be exercised, but they may have lost their EMI status if the working time test is no longer met. Loss of EMI status does not cause an immediate tax charge on the options already granted, but it means that future exercise may no longer benefit from EMI's favourable tax treatment. Exercise within 90 days of leaving the qualifying employment retains some protection.

If you are planning to leave the UK, check the status of any EMI options carefully with a specialist before departure to understand whether and how the departure affects the tax treatment of your existing grant.

US Stock Options and RSUs for UK Expats

Many UK-resident employees of US-listed companies receive either RSUs or US stock options — typically Non-Qualified Stock Options (NQSOs) or, more rarely, Incentive Stock Options (ISOs).

RSUs from US-listed companies are treated in the UK as employment income at vesting, as described above. The US company typically withholds US federal income tax from the shares delivered (particularly for US persons), and UK employees must also account for UK Income Tax and NIC. The UK-US double tax treaty allocates taxing rights and provides mechanisms for credit relief, but the interaction of two PAYE/withholding systems requires careful administration.

NQSOs are taxed in the UK as employment income at exercise on the spread between option price and market value — broadly the same treatment as UK unapproved options. The US also seeks to tax the gain, and the treaty credit mechanism applies.

ISOs have a more complex US tax treatment, including the Alternative Minimum Tax (AMT) consideration. In the UK, ISOs are not treated as qualifying options under UK law and are taxed in the same way as NQSOs at exercise. The interaction between US AMT and UK income tax is particularly complex and requires US tax specialist advice.

For UK residents with US-employer equity awards, it is worth considering the timing of exercises in relation to the UK and US tax calendars, the exchange rate at the time of exercise (the taxable value in the UK is determined in sterling at the spot rate at the date of exercise), and whether any double taxation arises and how it is relieved under the treaty.

Planning Points Before Leaving the UK

If you have significant unvested equity awards and you are planning to leave the UK, the following actions are worth considering:

1. Take stock of all outstanding awards. List every option, RSU, conditional share award, or SIP holding — the scheme type, grant date, vesting schedule, current market value, and option price.

2. Consider whether to exercise any vested options before departure. If you have vested options in the money at the time of departure, exercising before you leave means the entire gain is assessed in the UK — potentially preferable if your future country has a higher tax rate on employment income.

3. Understand the apportionment position. For awards vesting after departure, the time-apportionment calculation will determine what is UK-taxable. Ensure your employer understands your residency change and will report correctly.

4. Seek advice in the new country. The new country of residence will have its own view of when and how the awards are taxable. This may conflict with the UK position, creating double taxation that needs to be managed.

5. Notify HMRC of your departure. Your P85 and final UK tax return should reflect your departure date and the equity awards position as at that date.

How Global Investments Can Help

Global Investments works with internationally mobile professionals who have equity compensation arrangements and need to understand the cross-border tax implications of moving. We can introduce you to specialist tax advisers — including firms with dual UK and US or other jurisdiction capability — who can review your specific awards, plan the timing of exercises, and ensure your returns in all relevant jurisdictions are correctly coordinated. Contact us to discuss your equity planning needs.