Momo
US citizens in the UK · Tax basics

Owning a UK Ltd as a US citizen

Last checked

A US citizen who owns a UK limited company walks into CFC rules, Form 5471, and GILTI. A UK Ltd that is simple for a British owner is rarely simple for an American one, and the US can tax profits you have not taken out.

Incorporating in the UK is routine: a one-person limited company is a common, efficient way to run a business. For a US owner the same structure pulls in a set of US rules aimed at Americans who control foreign companies, and they turn a simple Ltd into a meaningful compliance project.

Controlled foreign corporation rules

A CFC, a controlled foreign corporation, is a non-US company that US persons own more than half of. A solely owned UK Ltd is a textbook CFC. The label matters because it switches on US rules that can tax the company's profits in the owner's hands, regardless of whether the money is distributed.

Form 5471

A US owner of a CFC generally files Form 5471 with their return each year. It is one of the most demanding US information returns, requiring the company's accounts to be restated in US terms, and the penalty for not filing is steep and starts whether or not any tax is due. The form alone is a reason many Americans take advice before incorporating.

GILTI

GILTI, global intangible low-taxed income, can tax the company's retained profits on the US owner's personal return even if nothing has been paid out. Designed for large multinationals, it sweeps in small owner-managed companies too. Reliefs and elections exist, and UK corporation tax already paid can offset some of it, but it has to be calculated and claimed rather than assumed.

The practical takeaway

None of this makes a UK Ltd impossible for an American, but it changes the maths. Operating as a sole trader, or planning the company structure with a cross-border accountant before incorporating, often avoids the worst of the filing. The reporting also feeds the wider FATCA and Form 8938 picture.

Common questions

Is a UK limited company a CFC for a US owner?

A solely owned one is a textbook case. A CFC, or controlled foreign corporation, is a non-US company that US persons own more than half of. The label matters because it switches on US rules that can tax the company's profits in the owner's hands regardless of whether the money is distributed.

Do I have to file Form 5471 for my UK Ltd?

A US owner of a CFC generally files Form 5471 with their return each year. It is one of the most demanding US information returns, requiring the company's accounts to be restated in US terms, and the penalty for not filing is steep and starts whether or not any tax is due.

Can the US tax profits I leave inside my UK company?

Yes, through GILTI, global intangible low-taxed income, which can tax retained profits on the US owner's personal return even if nothing has been paid out. It was designed for large multinationals and sweeps in small owner-managed companies too. Reliefs and elections exist, and UK corporation tax already paid can offset some of it, but it has to be calculated and claimed rather than assumed.

Confirm your own position with a cross-border specialist. Acceptance policies and tax rules change, and your facts may differ from the general case. Rates and terms here are the provider's published figures rather than an offer, and the provider decides each application on its own criteria. Use this as a map, not a ruling. Last checked .
Tax

FATCA

Do UK banks report your account to the IRS? Yes, through HMRC, under FATCA. It is a reporting law, not a tax. Where it bites is access.

 Tax

Form 8938

Form 8938 reports foreign financial assets on your US return. The thresholds for Americans living abroad are higher, and they are not the same as the FBAR.