navigating the complexities of US-UK taxation for LLC owners                                                May 2025

US LLCs and UK tax: what ever cross-bordered business owner should know                              

If you’re a UK resident who owns a US LLC, you’re in a unique position that offers both opportunity and complexity, especially when it comes to tax. While setting up a Limited Liability Company (LLC) in the US is often praised for its flexibility and ease, failing to understand how it’s treated for UK tax purposes can lead to unintended, and costly, consequences.

At DAS, we regularly help clients navigate this exact situation. Here’s what you need to know.

US vs UK tax treatment: a fundamental mismatch

In the United States, LLCs are usually treated as “pass-through” or “flow-through” entities. That means the LLC itself doesn’t pay tax on its income, instead, the profits are reported and taxed on the personal tax returns of the members (owners).

However, the UK doesn’t automatically see things the same way. HMRC typically treats US LLCs as “opaque” entities, similar to corporations. This means profits are taxed at the company level, and then again when distributed, potentially resulting in double taxation for UK-resident owners.

the anson vs HMRC case: a turning point, or is it?

In 2015, the UK Supreme Court ruled on the case of Anson v HMRC. Mr. Anson, a UK resident and member of a US LLC, successfully argued that the LLC’s income was attributable to him directly, entitling him to a foreign tax credit in the UK for the US taxes paid.

While this was hailed as a landmark decision, it’s crucial to understand the limits of its impact:

• The ruling was highly fact-specific, based on the exact structure and operating agreement of the LLC in question.
• HMRC has not changed its general stance: it still treats most US LLCs as opaque, unless strong evidence shows the LLC is legally transparent.

In other words, unless your LLC closely mirrors the facts of the Anson case, you cannot rely on this ruling alone to avoid double taxation.

what this means for you

If you’re a UK tax resident who owns a US LLC, you’re likely to face:

• No automatic foreign tax credit in the UK for US taxes paid on LLC income
• Potential double taxation on the same income
• Complex reporting obligations in both jurisdictions

But with careful structuring and professional advice, there are ways to reduce or even eliminate these issues.

how DAS can help

At DAS, we specialize in helping UK-based owners of US LLCs make sense of the rules, align their structure with best practices, and ensure tax compliance in both jurisdictions.

Whether you’re just setting up your LLC or you’ve already been operating for years, we can:

• Review your LLC operating agreement and structure
• Liaise with qualified tax professionals in both countries
• Help you determine if your setup could qualify for “Anson-like” treatment, or recommend more efficient alternatives

don’t leave it to chance, make your setup “Anson-proof”

Every business is different. Even small structural changes can have a major impact on how your income is taxed. Let us help you build a cross-border business that works for you, not against you.

Contact DAS today to book a consultation and ensure your US LLC is compliant, efficient, and tailored for success.