US LLC UK Tax Treatment: How HMRC Taxes a UK Resident Owner

HMRC's list of foreign entities in its International Manual (INTM180030) shows the US Limited Liability Company as opaque, with the date June 1997 and a note that this includes a New York LLC (March 2009). HMRC calls the list a general view, and says its view of a specific entity may vary.

In Revenue and Customs Brief 15 (2015), HMRC confirmed that it will continue with its existing practice to treat US LLCs as companies. To reach a general view, HMRC looks at the foreign commercial law the entity is formed under and at its internal constitution, weighing six factors such as separate legal existence and whether members are entitled to profits as they arise.

HMRC adds that how the entity is classified for tax purposes in any other country is not relevant. On Delaware LLCs (INTM180050), it says that whether the LLC is treated as a partnership, is disregarded, or is treated as a company for US tax makes no difference to its analysis. HMRC also says it understands the LLC law of other US states to be substantially the same as that of Delaware.

HMRC says that when an entity is described as opaque, its members will generally be taxed only on the distributions made by the entity. When an entity is described as transparent, its members will generally be liable to UK tax on the profits, income or gains of the entity, rather than only on distributions.

HMRC stresses that these are informal labels, and that the particular UK tax provision must always be considered. For Delaware LLCs, HMRC states the consequence directly: it generally regards members as not being in receipt of or entitled to the profits of the LLC, so individual members will only be liable to UK tax on any dividends or other distributions from the LLC. HMRC says they will be taxed at the dividend rate and entitled to the dividend allowance.

GOV.UK says you usually need to fill in a Self Assessment tax return if you are a UK resident with foreign income, using the foreign section of the return. If you do not usually send a return, you need to tell HMRC by 5 October following the tax year you had the income. GOV.UK lists one exception: you do not need a return if your only foreign income is dividends, your total dividends are less than the £500 dividend allowance and you have no other income to report.

On HMRC's published view, no, in the usual case. Its manual states that if the LLC is treated as a partnership or is disregarded for US tax, so that the member suffers US tax on their share of the profits, they will not be entitled to double taxation relief. HMRC considers claims relying on Anson case by case.

The background is Anson v HMRC [2015] UKSC 44. On 1 July 2015 the Supreme Court gave judgment for Mr Anson, a UK resident member of a Delaware LLC, on the facts found in that case. In Revenue and Customs Brief 15 (2015), HMRC said it had concluded that the decision is specific to those facts, and that individuals claiming double tax relief and relying on it will be considered on a case by case basis.

In the current manual page (INTM180050), based on its understanding of Delaware LLC law as at 6 December 2023, HMRC continues to believe that the profits of an LLC will generally belong to the LLC in the first instance. Its stated reason for refusing relief is that the same profits, income or gains would not be taxed in both countries.

HMRC describes a different result where the LLC is treated as a company for US tax. In that case it says individual members will be entitled to credit for US tax charged on distributions from the LLC, subject to the limits in Article 10 of the UK and US double taxation convention and all other conditions being met. The IRS says a single member LLC is disregarded unless it files Form 8832 and elects to be treated as a corporation. Whether an election would help or cost you more overall is a question for accountants on both sides.

GOV.UK states that the UK and USA double taxation convention entered into force on 31 March 2003 and is effective in the UK from 6 April 2003 for Income Tax and Capital Gains Tax. How its articles apply to you is for a qualified adviser.

It may. HMRC's manual (INTM120030) says a company is resident in the UK if it is incorporated in the UK, with certain exceptions, or if the central management and control of its business is in the UK. A US LLC is not incorporated in the UK, so the second test is the one to check.

This matters because HMRC treats US LLCs as companies. Its manual says that if a foreign entity is a company which is resident in the UK, you may also need to consider whether the profits are profits of the company for Corporation Tax, in which case the company is liable to UK tax on them. If you will run a single member LLC from the UK, raise this with an accountant before trading.

The same manual page says that where a company is UK resident under either test but is also resident in the country of a treaty partner, the terms of any company residence tie breaker in the treaty must be considered. Do not assume either answer for your LLC.

The IRS treats an LLC with one member as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation. A disregarded LLC wholly owned by a foreign person files a pro forma Form 1120 with Form 5472 attached, generally when it has a reportable transaction with a related party, and usually needs an EIN.

• EIN: the IRS says most new single member LLCs classified as disregarded entities will need an EIN, applied for on Form SS-4. We include it in formation; see our EIN service.
• Form 5472: the instructions say a foreign owned US disregarded entity has no income tax return filing requirement, but must file a pro forma Form 1120 with Form 5472 attached by the due date of that Form 1120. It cannot be filed electronically.
• Penalty: $25,000 for failing to file Form 5472 when due and in the manner prescribed. If the failure continues for more than 90 days after the IRS notifies you, an additional $25,000 applies for each 30 day period.

Whether you personally owe US income tax depends on your facts. Our guides on Form 5472 and US taxes for non resident LLC owners cover the US side in full, and our federal tax filing service prepares the forms.

A UK Ltd raises fewer UK tax questions, because the company pays Corporation Tax in the country where you live and there is no foreign entity classification to settle. A US LLC suits selling into the US market, but for a UK resident it brings two tax systems that view it differently.

Corporation Tax rates are as shown on GOV.UK on 15 November 2026. For the wider comparison of cost, banking and yearly filings, read UK Ltd vs US LLC. Or see UK company formation.

You can form a US LLC online from the UK without travelling. The order matters: take UK tax advice first, then choose a state, form the LLC with its EIN, and keep records that support both your IRS filing and your Self Assessment return.

1. 1

   Take UK advice before you form

   Show a UK accountant the HMRC pages in the sources. Ask about distributions, double tax relief and where the LLC will be managed.

2. 2

   Choose a state

   Compare Wyoming vs New Mexico, or see all fees on our pricing page.

3. 3

   Form the LLC and get the EIN

   Our formation service files the LLC and obtains the EIN. The LLC agreement matters for UK tax, so have your adviser read it.

4. 4

   Keep records from day one

   Record every payment between you and the LLC for Form 5472 and for your UK return.

See also our page on starting a US LLC from the United Kingdom.