US Tax Guide for Business Owners Living in the UK

The UK is a popular destination for American business owners, drawn by its financial center status and business-friendly environment. But the UK's worldwide income taxation and the US-UK tax treaty create complex filing questions for business owners. FileAbroad helps American business owners in the UK navigate FEIE, FBAR, and the cross-border questions that complicate filing.

Key Tax Issues for Business Owners in the UK

• UK tax residency: If you spend more than 183 days in the UK or have your center of vital interests there, you are a UK tax resident.
• UK corporation tax: UK companies pay corporation tax on profits (25% as of 2023). Dividends are taxed separately.
• US taxation of foreign corporations: If you own a UK company, you may have US reporting obligations (Form 5471) and potential GILTI/Subpart F income.
• Self-employment vs. company: UK sole traders pay income tax and National Insurance. UK limited companies pay corporation tax plus dividend tax.
• Totalization agreement: US-UK totalization agreement prevents double social security taxation.
• FEIE limitations: FEIE only applies to earned income, not dividends or corporate profits.

FEIE vs FTC for Business Owners in the UK

FEIE applies to earned income (salary from your company). FTC applies to UK tax paid on that income.

For corporate profits (dividends, GILTI), FEIE does not apply. FTC may be available for UK corporation tax paid.

FBAR & Reporting for Business Owners in the UK

UK business bank accounts are reportable on FBAR if you have a financial interest or signature authority. Form 5471 is required for US shareholders of foreign corporations.

Common Mistakes Business Owners Make in the UK

1. Not filing Form 5471 — Required for US shareholders of foreign corporations.
2. Not understanding GILTI — Global Intangible Low-Taxed Income may apply to your UK company.
3. Assuming UK corporation tax eliminates US tax — It doesn't. US tax still applies, with FTC as relief.
4. Not reporting UK business bank accounts on FBAR — Business accounts are reportable.

When to Get Professional Help

You should consider professional help if you own a foreign company, have foreign accounts exceeding $10,000, or have complex income situations. Business owners with foreign entities need specialized advice beyond individual tax preparation.

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FileAbroad explains U.S. federal tax and U.S. international information-reporting consequences of documented foreign facts. It does not provide foreign-country legal or tax representation, valuation opinions, banking or remittance advice, or advice on what a foreign authority will accept.

Scope statement reviewed 2026-08-30 · FileAbroad product/content owner