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The ultimate tax guide for Google employees

  • 4 min read
  • Last updated 10 May 2022

The average take home pay for Google employees was a whopping £234,000 in 2019. As a Google employee, there are a few things to consider when it comes to paying taxes. Usually, your employer pays your taxes on your behalf through PAYE and you don’t have to worry about it at all.

However, you’re also more likely to be in a position where you need to file a Self Assessment tax return as well. 

Why do Google employees need to file a tax return?

It depends on several factors. Firstly, many of you fall into the high earners category. High earners in the UK are considered anyone who makes £100k+ each year.

Another factor to take into account is that if you have any investments or assets. Depending on whether you exercise them or how much you make, you’ll may need to declare the profit to HMRC. You may also owe tax on them. 

You will need to file a Self Assessment tax return if you:

  • Earn £100,000 or more each tax year
  • Are self-employed and earned more than £1,000
  • Earn rental income over £1,000 (or £7,500 if you rent a room in your house)
  • Made over £12,300 in capital gains profit in one tax year
  • Earned more than £10,000 from savings interest – not within a cash ISA
  • Received more than £10,000 from dividends – not from a stocks & shares ISA
  • Earning foreign income
  • Have any other sort of untaxed income more than £1,000

If you’re making over £12,300 in capital gains profit, you’ll be subject to Capital Gains Tax (CGT). Don’t let it take you by surprise, though.

Your situation

Outlined number oneOutlined number one
How did you make money?
Profit from capital gains
Annual salary
?
Other income
?

Tax and profit

Outlined number two
  • Your profit from
    shares
    £20,000
    Incl. £12,300 tax-free CGT allowance
    ?
  • Capital Gains Tax to pay
    £1,413
  • Profit after tax
    £18,587

How your capital gains tax is calculated

Your total capital gains tax (CGT) owed depends on two main components:

  1. How much you earn in total
  2. What type of assets you sell

Your overall earnings determine how much of your capital gains are taxed at 10% or 20%.
Our capital gains tax rates guide explains this in more detail.

In your case where capital gains from shares were £20,000 and your total annual earnings were £69,000:

Capital gains tax (CGT) breakdown

You pay no CGT on the first £12,300 that you make

You pay £127 at 10% tax rate for the next £1,270 of your capital gains

You pay £1,286 at 20% tax rate on the remaining £6,430 of your capital gains

Adjusted Net Income

One of the main reasons a Google employee would need to file is so that HMRC can check that you’re paying the right amount of tax – not more and not less. Your Adjusted Net Income is your total taxable income, like your salary, rental income, etc. Tax reliefs like losses, pension contributions or donations to charities aren’t included. This does, however, include your Personal Allowance of £12,570.

If you earn over £100k a year, your Personal Allowance is reduced by £1 for every £2 you owe over £100k. When you start earning £125k, 140k, your Personal Allowance goes to £0. This means that the tax rate for the income between £100k-£125,140 is 60%. 

Confused? We get it, so check out this guide that explains it all and more. 

Deadlines

There are filing deadlines, registration deadlines and payment deadlines. And guess what? You’ve got to know them all! Only kidding, you don’t need to memorise anything, we do all that for you😉

Here are some dates and deadlines to be aware of:

What?When?
Tax year for individuals April 6th to April 5th
Self Assessment registrationOctober 5th
Filing deadline (paper)October 31st
Filing deadline (online)January 31st
Payment deadlineJanuary 31st
Class 2 National Insurance Contribution  payment deadline October 31st
Payment on Account (self-employed)July 31st

Never miss a tax deadline

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How you’re paid at Google

At Google, most employees receive Restricted Stock Options (RSUs) on top of their yearly salary and other benefits or compensation. An RSU is another form of equity compensation that used to compensate employees and is quite common nowadays, especially in big tech companies.📱

As big tech grows, there’s been a shift from stock options, which are more common in startups, to RSUs.

Are RSUs taxed as income?

RSUs are a promise to give employees shares at a certain event. Here are the two more important dates to take note of:

  • Grant date: when the share are promised to you
  • Vest date: when they’re available and can be sold 

Let’s say you’re granted 100 RSUs on starting your job. 20% vests every year over a five year total which means you can sell and profit from 20 (20% of the 100 total) RSUs every year. The value will be added to your salary if you sell straight away. 

However, if you choose to hold onto them, your tax situation might become less favourable because of two reasons. 👇

You’re already paying Income Tax and NI → your RSU earnings can push you into the higher tax band

You’ll likely owe Capital Gains Tax and will definitely have to file a tax return

So, each time the RSUs vest, you’ll have to pay both Income Tax and NIC on them. Income Tax is paid regardless of whether you keep or sell the shares. Mostly, this is done through PAYE via your employer, so you don’t need to do anything. 

If you sell, and the profit you make is above £12,300, you’ll be subject to Capital Gains Tax as well.

What if I need help with my tax situation?

If you need more help, get advice from an accredited accountant. They’ll answer any questions you have and even give you a written follow-up!

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