Running a UK limited company as an American

Figures relate to tax year 2025 (US) · 2025-26 (UK)

Incorporating is standard advice for a growing UK business, and for UK purposes it usually is the right call. For an American owner it also opens a US reporting regime designed for multinationals, applied without regard to your size.

Form 5471: the annual dossier

A US person who owns or controls a foreign company files Form 5471 with their personal return. For a majority owner, that means restating the company's accounts into US terms: income statement, balance sheet, earnings and profits, and transactions between you and the company.

The penalty regime is what makes it serious. Non-filing starts at $10,000 per form per year, and an unfiled 5471 keeps the statute of limitations open on your entire personal return — so the exposure does not age away the way most tax risk does.

GILTI: tax on profits you never took

Behind the reporting sit the controlled foreign corporation rules. GILTI can tax you personally, each year, on the company's profits above a routine return on its tangible assets — whether or not any dividend was paid. For a consultancy with few fixed assets, that can mean nearly all the profit.

The mitigations are real but must be elected: a high-tax election can exclude income already taxed at a sufficient UK rate, and other elections change how the income is treated on your return. UK corporation tax at current rates often supports these — but only when claimed, and the choice interacts with how you pay yourself.

The elections are where the tax actually gets decided. The default treatment is rarely the right one.

Salary, dividends and the two-country question

How you extract money matters twice over. The UK-efficient mix of small salary and larger dividends can be inefficient for US purposes, where dividends from a foreign company are treated differently and interact with the credits you rely on.

Getting the remuneration policy right means solving for both systems at once rather than optimising one and absorbing the other. That is a modelling exercise, and it usually pays for itself in the first year.

Practical points that come up constantly

• A dormant company still files — a simplified 5471, but a filing nonetheless.
• Check-the-box elections can make the company transparent for US purposes, which sometimes simplifies matters dramatically and sometimes makes them worse.
• A non-American spouse holding shares changes the ownership analysis and may change who files.
• Company bank accounts can bring FBAR obligations for those with signature authority.
• Selling the company later has a US answer that should be understood well before a sale process starts.

None of this makes a UK company a bad idea for an American. It makes it a structure that needs designing with both tax systems in the room — ideally before the company exists, and certainly before the first profitable year closes.