Owning a UK company as a US expat
Published on October 22, 2025
by Rose-ann De Villa, EA, CPA
Rose-ann De Villa, an IRS Enrolled Agent and CPA with 14 years of expat tax experience, specializes in US tax preparation, tax planning, and tax advice for US citizens and Green Card holders living and working in the UK.
Rose-ann has been mentioned in the Daily Express UK news wherein she talked about Stimulus payments and Child Tax Credit refunds for US expats in the UK.
Table of Contents
Many Americans choose to set up companies in the UK to expand their business, sell into European markets, or manage clients overseas. The UK offers numerous benefits to owning a company, but US citizens should also consider how UK business rules interact with their ongoing tax responsibilities in the US.
What makes the UK attractive for American entrepreneurs in 2025?
The UK remains one of the most welcoming places for Americans to start and grow a business in 2025. You can form a company quickly, operate fully online, and access a skilled, English-speaking workforce without facing complex local ownership laws. The country’s combination of open markets and modern digital systems makes it easy for expats to manage operations from anywhere.
- Skilled workforce: Cities like London, Manchester, and Edinburgh attract experienced professionals in finance, technology, and creative industries.
- Funding and incentives: Government-backed R&D tax credits and active angel investor networks make innovation easier to finance.
- Familiar legal environment: English law and transparent regulations reduce the learning curve for Americans accustomed to US standards.
- Exchange rate advantage: The pound has remained relatively favorable to the US dollar, keeping early business costs competitive.
Overall, the UK combines accessibility with scale, a straightforward place to begin, but is connected enough to reach global markets.
Can a US citizen legally own a company in the UK?
Yes, Americans can own 100% of a UK company with no residency requirement. You don’t need to be British or live in the UK to own a limited company there. What you do need are three essentials:
- A UK registered office address: Every company must have a physical address in the UK where official mail can be sent. Many expats use their accountant’s office or a virtual business address service for this purpose.
- At least one company director: A director is a person legally responsible for running the company and filing its records. The director can live anywhere in the world; there’s no rule that says they must reside in the UK.
- Identity verification (coming soon): Starting 18 November 2025, new Companies House rules will require every director and major shareholder (called a person with significant control, or PSC) to verify their identity through a digital government system. This reform aims to make UK companies more transparent and to prevent fraud.
Bottom line: No UK citizenship or local partner required. The ownership rules are remarkably open compared to other countries.
What visa do Americans need to start or run a company in the UK?
If you plan to live in the UK while running your company, you’ll need a visa that lets you work there legally. The old Tier 1 Entrepreneur and Start-up visas have been replaced, and the UK has introduced the Innovator Founder Visa.
In 2025, the main option for US expats is the Innovator Founder Visa.
- It’s designed for business owners with ideas that are innovative, viable, and scalable.
- You’ll need an endorsement from an approved body that believes in your plan.
- The visa lasts for three years, is renewable, and can lead to permanent settlement (ILR).
- There’s no fixed £50,000 investment requirement anymore, but you’ll still need to show real resources and a credible plan.
Other pathways include Skilled Worker (self-sponsorship) if your company will employ you, or the Global Talent Visa if you’re exceptional in your field.
Important! Start-up and Tier 1 Entrepreneur visas are closed. The Innovator Founder route is now the main option for Americans starting a business in the UK.
Need help with your US-UK tax filing?
Get in touch.
What are the steps to register a UK limited company as a US expat?
Setting up your UK company is refreshingly straightforward. Here’s a quick step-by-step guide:
- Choose a structure: Most expats pick a Private Limited Company (Ltd).
- Pick a name: Register it on the Companies House website. The online fee is £50.
- Appoint directors and shareholders: Complete ID verification once it becomes mandatory in late 2025.
- Provide a UK-registered address and business email
- State your lawful business purpose
- Receive your company number and UTR (Unique Taxpayer Reference)
Companies House is phasing in new digital identity checks under the Economic Crime and Corporate Transparency Act (ECCTA), so expect more automation and fewer paper forms soon.
What taxes will my UK company pay in 2025?
If your UK company earns income from trading or providing services, you’ll be responsible for a few main taxes. You can expect these main taxes:
1. Corporation Tax
This is the main tax your company pays on its profits. The current rates for the 2025/26 tax year are:
- 19% on profits up to £50,000
- 25% on profits over £250,000
Anything in between qualifies for marginal relief, which gradually increases your rate as profits rise. If your company’s only shareholder is you, you’ll still pay this tax in the UK before moving money in the US.
2. VAT (Value Added Tax)
VAT works like a sales tax. You must register if your company’s taxable turnover reaches £90,000 in any rolling 12-month period. Once registered, you’ll add VAT (usually 20%) to most goods or services you sell in the UK and submit quarterly VAT returns.
Many small expat-run businesses don’t register right away but monitor their sales to avoid missing the threshold.
3. PAYE and Employer National Insurance (NIC)
If you pay yourself a salary through your company or hire UK employees, you’ll need to set up PAYE (Pay As You Earn) with HMRC. This system withholds income tax and NIC from salaries. Your company also pays Employer NIC, basically a tax on the wages you pay.
Tip: There is no UK withholding tax on dividends paid to non-residents. That means you can transfer company profits to yourself abroad without extra UK tax being deducted at source.
Exception: Certain Real Estate Investment Trust (REIT) distributions can still face UK withholding.
How does owning a UK company affect my US taxes?
Owning a UK company doesn’t remove your US tax obligations. Here’s where things get tricky: the IRS taxes all US citizens and Green Card holders on their worldwide income, no matter where they live. That means even if your UK profits are already taxed by HMRC, you still have to report them on your US return.
The exact US forms you file depend on how your company is structured and how you handle its profits:
- Form 5471 / 8992 – For foreign corporations and GILTI
Required if your UK company is a Controlled Foreign Corporation (CFC). These forms report ownership, earnings, and any GILTI (Global Intangible Low-Taxed Income) that might be taxed in the US even if you don’t take dividends. - Form 8858 / 8832 – For disregarded entities
If you “check the box” to treat your UK company as part of yourself instead of a separate corporation, you’ll use these forms to report its income directly on your personal return. - Form 926 – For large capital transfers
Required if you transfer more than US$100,000 in cash or property to your UK company during the tax year. If your UK company also earns income from U.S. sources or operates through a U.S. branch, it may be required to file IRS Form 1120-F to report that US effectively connected income and claim treaty benefits where applicable. - FBAR (FinCEN 114) / Form 8938 – For foreign bank accounts and assets – Used to disclose business accounts or investments your UK company holds if you have signature authority or ownership.
In short, owning a UK company means managing two tax systems: paying local taxes in the UK and keeping the IRS informed on the US side. The goal is to align both correctly so you don’t end up taxed twice.
What new compliance rules do US expats need to watch in 2025?
A few key reforms are shaking up UK company law:
- Companies House ID verification: From 18 November 2025, mandatory ID checks will apply to new directors/PSCs at incorporation/appointment; existing companies will follow transitional steps tied to their confirmation statement.
- Registered office rules: No more P.O. boxes, addresses must be “appropriate” and verifiable.
- Digital-only filing: Annual accounts, confirmation statements, and updates will be submitted online.
- Tax residency overhaul: The government replaced the long-standing ‘non-dom’ regime with a new residence-based system, known as the Foreign Income & Gains (FIG) regime, effective April 2025.
These changes aim to make UK companies more transparent and harder to abuse, but for honest business owners, they mainly mean more digital paperwork.
How can Americans avoid double taxation between the US and UK?
Two main tools prevent paying tax twice on the same income:
|
Relief |
Claim on |
Benefit |
|
Foreign Tax Credit (FTC) |
Form 1116 |
Offset UK taxes against US liability |
|
Foreign Earned Income Exclusion (FEIE) |
Form 2555 |
Exclude up to US$130,000 of earned income |
|
Tax Treaty |
Form 8833 |
Avoid or reduce overlapping taxes |
Tip: The US-UK Totalization Agreement prevents you from paying into both US Social Security and UK National Insurance on the same income stream.
FAQs
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Should I choose a UK limited company or register as self-employed?
If you’re freelancing solo, self-employed status might be simpler. But if you plan to grow, hire, or retain profits, a limited company offers liability protection and a professional image.
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What grants or incentives are available for US entrepreneurs in the UK?
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What are common mistakes US expats make when setting up a UK company?
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Can I live in the UK if I own a UK company?
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