US Tax for UK Founders Running US LLCs

The US-side analysis for a UK-resident-owned US LLC is the same as for any non-US owner: the LLC owes US federal income tax only if it carries on a US trade or business producing effectively connected income (ECI). A UK founder operating the LLC from the UK — no US office, no US employees, no US dependent agent concluding contracts — generally has no ECI, so the LLC's business profits face no US federal income tax, and Form 5472 with pro-forma Form 1120 is information reporting only (USD 25,000 penalty per failure under IRC Section 6038A). US-source FDAP income is the exception, subject to 30% withholding reduced under the US-UK treaty.

The dominant UK-side question is entity characterisation, and the common misreading is to treat Anson v HMRC [2015] UKSC 44 as having made US LLCs transparent. It did not. HMRC's published position (Revenue & Customs Brief 15 (2015), International Manual INTM180030) is that US LLCs remain opaque by default; INTM180050 confirms HMRC views the Anson outcome as specific to its facts and reviews transparency claims case by case. Under the default opaque treatment, the UK-resident owner is taxed only on distributions, as foreign dividends, at UK dividend rates topping 39.35% (2025/26); a Controlled Foreign Company charge under TIOPA 2010 Part 9A does not reach an individual owner (Part 9A applies to UK-resident companies), though the transfer-of-assets-abroad rules in ITA 2007 sections 720–730 can apply to some structures. Where transparent treatment is established on the facts — the operating agreement vesting profits directly in members — the owner instead reports the profit share as foreign trading income through Self Assessment (SA100 + SA103 + SA106), at income-tax rates to 45% and taxed as the profits arise rather than on distribution; Class 4 National Insurance at 6% / 2% may apply, while Class 2 has been voluntary since April 2024. Double-tax relief runs through the US-UK Income Tax Treaty (signed 2001, 2002 protocol, in force 2003) Article 24, though with little US tax to relieve where there is no ECI. One freshness note that changes the calculus for established residents: the remittance-basis / non-dom regime was abolished from 6 April 2025, so worldwide profits are taxed as they arise regardless of domicile.

**Sources cited above:** IRC Sections 864(b) / 882 (USTB / ECI), Section 6038A (Form 5472), Anson v HMRC [2015] UKSC 44, HMRC Revenue & Customs Brief 15 (2015) + International Manual INTM180030 / INTM180050, TIOPA 2010 Part 9A (CFC — companies only), ITA 2007 ss.720–730 (transfer of assets abroad), US-UK Income Tax Treaty (2001, 2002 Protocol, in force 2003) Articles 7 and 24, Finance Act 2025 (non-dom abolition). Last verified 2026-06-01.