Do I owe US tax on UK RSUs that vested after I left the company?

Yes, if you are a US citizen. The United States taxes citizens on worldwide income, and an RSU is generally taxed when the shares are delivered, at their fair market value. Leaving the employer or the UK before the vest does not remove the income from your US return for the delivery year. The UK tax on the award can usually be credited on Form 1116 against the US tax on the foreign-source portion.

Will HMRC tax my good leaver award if I am no longer UK resident when it vests?

Usually, to the extent it relates to your UK years. Under Chapter 5B of Part 2 of ITEPA 2003, securities income is spread over a relevant period and only the part accruing in tax years when you were non-UK resident with duties wholly outside the UK drops out. Your former employer normally deducts PAYE on code 0T, and a Self Assessment return may be needed to reach the correct final liability.

How is a post-departure vest split between US-source and foreign-source income?

By workdays. Treasury Regulation 1.861-4 sources multi-year compensation on a time basis over the period to which it is attributable, typically grant to vesting. For a good leaver whose remaining conditions fell away on leaving, there is a supportable position that the period ends at the leaving date, so a London-based career makes most of the vest foreign-source. US business-trip days remain US-source and should be counted from records.

Can I use the Streamlined procedures if I have moved back to the US?

Possibly the Foreign Offshore route. It requires no US abode and at least 330 full days outside the US in any one or more of the three most recent tax years whose due dates have passed, so a recent London year can qualify you. If you now fail that test, the Domestic route needs previously filed returns, allows amended returns only and carries a 5 percent miscellaneous offshore penalty.

Can I exclude a late-vesting UK award with the foreign earned income exclusion?

Often not. The Form 2555 instructions exclude amounts received after the end of the tax year following the year in which the services were performed, and multi-year awards often vest later than that. Any foreign tax on income you do exclude cannot also be credited. For higher earners taxed at UK rates up to 45 percent, the foreign tax credit on Form 1116 is usually the better route anyway.

What is my US cost basis in the shares when I sell them later?

Your basis is the value of the shares when they were delivered and included in your income, converted to dollars at the exchange rate on the vesting date. Only the later change in dollar value is capital gain or loss when you sell. Starting from a zero basis, which UK plan statements can imply, taxes the same award twice, once as wages and again as a gain.

Missed US Tax Returns: UK Good Leaver Share Awards

Missed US tax returns are common among American bankers and executives who left a UK employer as a good leaver and kept unvested RSUs or deferred share awards that vested months or years later. The short answer: every vest is US taxable income for a US citizen in the year the shares are delivered, even if you had already left the job and the country, and the award must be sourced between the US and abroad by workdays so that UK tax can be credited. If those vests never reached a Form 1040, the fix is usually a Streamlined submission or delinquent and amended returns with a rebuilt Form 1116, plus correct share basis so the later sale is not taxed twice.

In the returns we prepare for former London-based managing directors, directors and partners, this is one of the most expensive quiet errors we see. The UK employer runs PAYE on the vest, the payslip goes to an old address, the shares land in a plan account nobody looks at, and the US return for that year reports salary only. Nothing on the US side flags it until a sale, a broker statement or an IRS matching notice does.

What is a good leaver share award, and why does it keep vesting after you leave?

A good leaver award is an unvested share award that the plan rules allow you to keep when you leave for a permitted reason, such as redundancy, retirement, ill health, a business sale or a discretionary board decision. Instead of forfeiting, the award either continues to vest on its original timetable, vests early on leaving, or is reduced pro rata for time served and then vests on the normal dates. UK banks and asset managers frequently layer this with deferral and holding periods, so a leaver can still be receiving shares three or more years after the last day in the office.

The forms we see most often in this situation are:

Restricted stock units (RSUs): an unfunded promise to deliver shares at vesting, typically one share per unit.
Deferred share awards and deferred bonus shares: part of an annual bonus paid in shares that vest over several years.
Long-term incentive plan (LTIP) awards: performance-tested awards, often structured as nil-cost options or conditional share awards.
Market-value or nil-cost share options that became exercisable after the leaving date.
Restricted shares issued up front but subject to forfeiture, which are rarer in UK banking but do occur.

The label on the plan document matters less than two facts: when you actually became entitled to the shares, and where you were working while you earned them. Both governments build their tax charge around those two facts, but they do not measure them identically, and that mismatch is where double tax and missed filings come from.

When does the US tax an RSU that vests after you left the UK employer?

For a US citizen, the United States taxes worldwide income regardless of residence, so a vest after departure is reportable whether you now live in New York, Dubai or still in London. RSUs are generally not taxable at grant. The IRS Equity (Stock)-Based Compensation Audit Techniques Guide, https://www.irs.gov/pub/irs-pdf/p5992.pdf, explains that an RSU is an unsecured, unfunded promise, that the taxable event generally occurs at vesting, and that when stock is delivered the fair market value of the shares is included in income under IRC section 83. Because no property is transferred at grant, a section 83(b) election is not available for an RSU.

Restricted shares issued at grant work differently: under section 83 the value is included when the shares become substantially vested, meaning no longer subject to a substantial risk of forfeiture, unless an 83(b) election was made at grant. Options are generally taxed at exercise rather than vesting where they have no readily ascertainable fair market value. For all three, the amount is compensation income, it belongs on the US return for the year of the taxable event, and it is foreign wage-type income, not investment income, even though it arrives as shares.

The practical consequence for a good leaver is that the US tax year of the income is the year of delivery, which may be two or three years after you last worked for the UK employer. If you moved back to the US in the meantime, the income lands on a US-resident return that often looks nothing like your expat returns, and it is easy to assume, wrongly, that UK PAYE settled everything.

How are post-departure vests sourced between the US and the UK?

Sourcing decides how much of the vest is foreign-source income, and therefore how much UK tax you can credit. Treasury Regulation 1.861-4(b)(2)(ii), available at https://www.ecfr.gov/current/title-26/section-1.861-4, sources employee compensation for services performed partly inside and partly outside the United States on a time basis: the US-source portion is the number of days worked in the US over the total days worked in the relevant period. For multi-year compensation, which includes equity awards, the regulation applies that time basis over the period to which the compensation is attributable. Its stock option illustration uses the period from grant to the date on which all employment-related conditions for exercise have been satisfied, in other words vesting.

Practitioners apply the same grant-to-vest window to RSUs and deferred awards, and that creates the first good leaver question nobody addresses well: what happens to the part of the window after you left? You performed no services for that employer after your leaving date. Where the plan removed every employment-related condition on leaving, so that only the passage of time stood between you and the shares, there is a well-supported position that the attribution period ends on the leaving date. If you worked almost entirely in London up to that date, almost the entire vest is foreign-source even though it was delivered while you were living in the US. Where performance conditions or post-leaving restrictions genuinely continued, the analysis is harder and has to follow the plan terms. Either way, we document the position in a workpaper built from the plan rules and your leaver letter, because this is exactly the figure an examiner will ask about.

Workday counts need real evidence: travel diaries, calendar exports, expense reports and entry stamps. US business trips during a London posting are the item most often missed. Those days are US-source under the regulation, and UK tax on them is not normally creditable against US tax on US-source income.

Does the UK still tax share awards that vest after you have left and moved abroad?

Yes, to the extent the income relates to your time as a UK resident or to UK duties. HMRC guidance for internationally mobile employees starts at https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm162000. Since 6 April 2015 the apportionment rules sit in Chapter 5B of Part 2 of the Income Tax (Earnings and Pensions) Act 2003, sections 41F to 41L, which spread securities income across a relevant period and remove the foreign part from the UK charge. The underlying charge on an RSU is under Part 7 Chapter 5 as a securities option: HMRC confirms at https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm20193 that RSUs conferring a right to acquire securities are taxed under Chapter 5 from 6 April 2016.

For securities options, the relevant period begins with the day the option is acquired and ends with the day of the chargeable event or, if earlier, the day the option vests, as set out in section 41G(8) at https://www.legislation.gov.uk/ukpga/2003/1/section/41G and in HMRC guidance at https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm162565. The gap angle for good leavers is section 41G(11): an option vests when it becomes exercisable or, if earlier, when it becomes exercisable subject only to a period of time expiring. If leaving as a good leaver stripped away every remaining condition except the calendar, the UK relevant period can end at the leaving date, and the whole award is measured against your UK years.

Where the relevant period does run past the leaving date, securities income accruing in a tax year is treated as unchargeable foreign securities income only if you were not UK resident in that year and the duties of the employment were carried out wholly outside the UK, as HMRC explains at https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm162660. Split year treatment can carve the overseas part of your departure year out of the charge. The resulting UK-chargeable slice is taxed as employment income even though you are now non-resident.

The former employer normally operates PAYE. HMRC's employer guidance, CWG2, at https://www.gov.uk/government/publications/cwg2-further-guide-to-paye-and-national-insurance-contributions/2025-to-2026-employer-further-guide-to-paye-and-national-insurance-contributions, requires payments in connection with employment-related securities made after a P45 has been issued to be taxed on code 0T on a non-cumulative basis. That code gives no personal allowance and frequently produces a withholding figure that differs from your true liability, which is why a UK Self Assessment return is often needed to settle the final number.

What does the US-UK tax treaty change for a US citizen good leaver?

Less than most people expect. Article 14 (Income from Employment) of the US-UK treaty lets the country where the employment was exercised tax the remuneration derived from it, and the Exchange of Notes confirms that benefits from share and stock option plans are other similar remuneration for Article 14. The treaty documents are listed by the IRS at https://www.irs.gov/businesses/international-businesses/united-kingdom-uk-tax-treaty-documents.

The saving clause in Article 1(4) lets the US tax its citizens as if the treaty had not come into effect, so the treaty does not exempt a US citizen's vest from US tax. Article 1(5) preserves Article 24 (Relief from Double Taxation), so credit relief survives.
The Exchange of Notes contains a specific option apportionment rule, but it applies only where the employee remains in that employment at the date of exercise. A good leaver, by definition, does not. Do not assume that treaty rule governs your award; domestic sourcing rules on each side usually do the work.
HMRC notes at https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm163130 that the US apportions option gains from grant to exercise while Chapter 5B works from grant to vest, and that foreign tax credit relief is how the resulting mismatch is addressed.
Article 24(6) contains special re-sourcing rules for US citizens who are resident in the UK. Whether they help depends on your residence in the year the income is taxed, so they need to be tested, not assumed.
Where both countries insist on taxing the same slice, the Mutual Agreement Procedure in Article 26 is the remaining route.

Can you use the foreign earned income exclusion or the foreign tax credit on these vests?

The foreign earned income exclusion rarely works well here. The Form 2555 instructions at https://www.irs.gov/instructions/i2555 exclude from foreign earned income amounts received after the end of the tax year following the tax year in which you performed the services. A multi-year award delivered two or three years after the London work was done usually fails that test for the earlier years of the vesting window. Even where part qualifies, IRS Publication 514 at https://www.irs.gov/publications/p514 confirms you cannot take a credit or deduction for foreign tax paid on income you exclude, and with UK rates at up to 45 percent on income over the threshold shown at https://www.gov.uk/income-tax-rates, the credit is almost always the stronger tool for this audience.

The foreign tax credit is claimed on Form 1116. The IRS explains at https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit-how-to-figure-the-credit that wages and similar active income fall in the general category, that the credit is limited by the US tax on foreign-source taxable income, and that unused foreign tax can be carried back one year and forward ten years. Two rules from Publication 514 shape how we rebuild these years: only the legal and actual foreign tax liability qualifies, so over-withholding under a 0T code that you could reclaim from HMRC is not creditable, and if HMRC later refunds tax you must generally file Form 1040-X so the US tax can be redetermined.

How do you fix missed US tax returns that left out good leaver vests?

The right route depends on whether returns were filed at all, where you live now, and whether foreign account reporting was also missed. The plan account that receives the vested shares, and any UK bank or brokerage account, may also have belonged on an FBAR under the rules at https://www.fincen.gov/report-foreign-bank-and-financial-accounts, and potentially on Form 8938. That is what brings the Streamlined procedures into play.

Streamlined Foreign Offshore Procedures: for US citizens who had no US abode and were physically outside the US for at least 330 full days in any one or more of the three most recent tax years whose due dates have passed. You file three years of delinquent Forms 1040 or amended Forms 1040-X, six years of FBARs and Form 14653, marked Streamlined Foreign Offshore in red, and no miscellaneous offshore penalty applies. See https://www.irs.gov/individuals/international-taxpayers/us-taxpayers-residing-outside-the-united-states.
Streamlined Domestic Offshore Procedures: for US residents who previously filed returns for each of the three most recent years. Only amended returns are allowed, delinquent returns cannot be filed through this route, Form 14654 is required, and a 5 percent miscellaneous offshore penalty applies to the highest aggregate year-end value of the foreign financial assets in the covered period. See https://www.irs.gov/individuals/international-taxpayers/us-taxpayers-residing-in-the-united-states.
Both routes require a certification that the failure was non-willful, meaning negligence, inadvertence or mistake, and both are closed if the IRS has already opened a civil examination or a criminal investigation. The eligibility rules are at https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures.
Outside Streamlined: if there is no foreign account issue, a filed return that omitted a vest is corrected with Form 1040-X, and a year with no return at all is fixed by filing a late original Form 1040 with the vest, the sourcing workpaper and Form 1116 attached.

The failure mode we see most often among returning bankers is assuming the move home closed off the Foreign Offshore route. It does not necessarily. The test looks at any one of the three most recent years, so a client who relocated to New York part-way through the period may still have a full London year inside the window and qualify for the no-penalty route, even though their most recent return is a US-resident return.

Worked scenario: a London managing director who moved back to New York

The following is an illustration only. The figures are invented to show the mechanics, rounded, and use an assumed exchange rate of 1.25 US dollars to the pound throughout. Real returns use the rates and plan data for each actual date.

Assume a US citizen managing director at a London bank received an RSU award of 1,500 shares on 1 March 2022, vesting in full on 1 March 2025. She left on 30 June 2024 as a good leaver, the plan removed all remaining service and performance conditions on leaving, and she moved to New York in July 2024. Her calendar records show 560 workdays between grant and leaving, of which 40 were business trips to New York and 520 were in the UK. On 1 March 2025 the shares were delivered at an assumed value of 40 pounds each, so the award was worth 60,000 pounds, or 75,000 dollars at the assumed rate. She filed her 2025 US return reporting her New York salary only.

US sourcing: taking the position that the attribution period ended on the leaving date, 40 of 560 workdays are US-source, about 7.1 percent. That makes roughly 5,360 dollars US-source and 69,640 dollars foreign-source general category income. All 75,000 dollars is included in 2025 wages.

UK tax: the former employer withheld PAYE on code 0T. Assume that after her Self Assessment return is settled, her final UK liability on the award is 27,000 pounds, a simplifying assumption of 45 percent on the whole award that ignores National Insurance and the interaction with her other income. At the assumed rate that is 33,750 dollars. Because the UK taxed her as a UK resident across the whole period, the roughly 7.1 percent of UK tax that relates to the 40 New York workdays, about 2,410 dollars, sits against US-source income and is at risk of being uncreditable unless a treaty rule or competent authority relief reaches it.

US credit: assume a 37 percent US marginal rate on the award, giving about 27,750 dollars of US tax. The Form 1116 limitation on the foreign-source slice is roughly 25,770 dollars, so she credits about 25,770 dollars and carries forward the excess of roughly 5,570 dollars of UK tax on the foreign slice for use against future general category income. She still owes US tax of about 1,980 dollars on the US-source slice, plus interest from the original due date. Without the correction she was exposed to US tax on the full 75,000 dollars once the IRS picked it up, with the credit position unclaimed.

Basis: the 1,500 shares take a US basis equal to their value at delivery, 75,000 dollars, or 50 dollars per share at the assumed rate. If she sells later at 44 pounds, only the increase in dollar value, measured at the exchange rates on each date, is capital gain. Missing this step is how people pay US tax on the same award twice: once as wages on the amended return and again as a gain computed from a zero basis on the sale.

How do you rebuild Form 1116 and the share basis for the missed years?

Reconstruction is a document exercise before it is a tax computation. For each vest we assemble the grant agreement and plan rules, the leaver letter confirming good leaver treatment, the vesting statements showing shares delivered and shares sold to cover tax, UK payslips or the post-leaving payment record, the P60 or P45 for the relevant tax year, any UK Self Assessment returns and HMRC calculations, and the workday evidence. The UK tax year runs 6 April to 5 April, so a single US calendar year usually touches two UK tax years and the UK tax has to be allocated to the correct US year.

Report the gross value of shares delivered as wages, not just the net shares after sell-to-cover.
Treat shares withheld or sold to pay UK tax as tax paid, with a basis equal to value at vest, so the sell-to-cover sale shows little or no gain.
Split each vest into US-source and foreign-source slices with a dated workday schedule, and keep it with the return.
Claim the credit for the final UK liability, not the 0T withholding, and adjust if HMRC later refunds or assesses.
Track excess credits by year in the general category so carryforwards are not lost on the next return.
Confirm whether the plan account or UK broker account belongs on the FBAR and Form 8938 for each year.

Publication 514 gives you ten years to claim a refund of US tax based on foreign tax you paid or accrued but did not claim. That matters for good leavers who over-reported: some clients who did report vests did so on the FEIE or with no credit at all, and a properly sourced Form 1116 can recover money on years that look closed for other purposes.

What goes wrong most often with good leaver awards on US returns?

Assuming UK PAYE on the vest satisfied the US filing obligation because the employer handled the tax.
Reporting only the net shares received after sell-to-cover instead of the gross value delivered.
Sourcing the whole award to the US because the shares arrived after the client moved back.
Claiming the FEIE on a vest paid more than a year after the year the London work was done.
Crediting 0T over-withholding instead of the final UK liability, then never reporting the HMRC refund.
Selling the shares years later from a zero basis, taxing the same value twice.

Each of these is fixable, and most are cheaper to fix before the IRS asks. Once a civil examination has started, the Streamlined procedures are closed and the conversation moves to penalties on the examiner's terms. If you left a UK employer with awards still vesting and are not sure every vest reached your US return, the sequence is simple: gather the plan and leaver documents, count the workdays, establish the final UK tax, and choose the filing route before the next vest lands.