US UK Tax Accountant for Founders: What You File Each Year

US UK tax accountant for founders: an introduction

A US UK tax accountant for founders prepares the personal US return of an American who owns a UK company, together with the international forms that ownership creates. The company itself files in the UK. Meanwhile, the United States looks through the company to its US shareholders and may tax some of its profit before any dividend is paid. Consequently, the founder's filings on each side depend on the other.

This article sets out the yearly filings, the forms that carry the largest penalties, and when to bring in a cross-border preparer. Our full guide to US-UK tax for founders, fund managers and executives covers equity pay and fund structures as well.

Why a US UK tax accountant for founders is different

A UK accountant prepares the company's accounts and Corporation Tax return. A US preparer prepares your Form 1040. However, neither of those alone covers the link between them. The US rules on controlled foreign corporations need figures from the UK accounts, restated under US principles and converted to dollars. Therefore, founders need someone who reads both sets of rules at once. In our experience, the gap shows up first as a missing Form 5471.

What a controlled foreign corporation is

A controlled foreign corporation is a non-US company in which US shareholders own more than 50% of the vote or value. A US shareholder, for this purpose, is a US person who owns at least 10%. The definitions sit in 26 US Code section 957 and the sections around it. A UK company founded and owned by one American is almost always a controlled foreign corporation. As a result, special US reporting and income rules apply from the first year.

What does a US founder of a UK company file each year?

On the US side, you file your Form 1040 with Form 5471 for the company, a net CFC tested income calculation where relevant, and an FBAR. On the UK side, the company files its accounts and Corporation Tax return, and you may file a Self Assessment return. Each item has its own deadline.

The US filings

Your Form 1040 is the base. Form 5471 reports the UK company's ownership, income, balance sheet and transactions with you. Form 8992 calculates the inclusion formerly called GILTI. Moreover, the company's UK bank account usually goes on your FBAR, because you have a financial interest or signature authority over it. The IRS explains the account rules on its page about the Report of Foreign Bank and Financial Accounts. Finally, Form 8938 may apply if your foreign assets pass its thresholds.

The UK company filings

The company files a Company Tax Return, form CT600, within 12 months of the end of its accounting period. It usually pays Corporation Tax 9 months and one day after the period ends. HMRC sets out both dates on its page about Company Tax Returns. In addition, the company files annual accounts at Companies House, explained on the GOV.UK page about annual accounts. A US UK tax accountant for founders needs those accounts before the US forms can be finished.

Your own UK return

If you are UK resident and take dividends, you will usually file a Self Assessment return. Dividends above the allowance are taxed at the dividend rates HMRC publishes on its page about tax on dividends. Salary through PAYE may need no return on its own. However, most founders have enough other income to need one.

Why does Form 5471 matter so much?

Form 5471 carries a $10,000 penalty for each company and each year it is missing or incomplete. Further penalties can follow after an IRS notice. It can also keep your whole US return open to assessment. Hence, it is the first form a US UK tax accountant for founders checks.

Who files and which category

The Form 5471 instructions sort filers into categories. Category 4 covers a US person who controls the company, meaning more than 50% of the vote or value. Category 5 covers a US shareholder of a controlled foreign corporation. Other categories catch officers, directors and new shareholders. A sole American founder is often in both Category 4 and Category 5. Each category decides which schedules you complete.

Penalties and the open statute

According to the instructions, the penalty is $10,000 for each annual accounting period of each foreign corporation. If the form is still missing 90 days after an IRS notice, a further $10,000 applies for each 30 days, up to $50,000. Additionally, the IRS can reduce your foreign tax credits. Under 26 US Code section 6501, a missing information return can also keep the assessment period open. Therefore, filing late is far better than never.

How is the UK company's profit taxed in the US?

Some of the profit can be taxed in the United States in the year it is earned, even if it stays in the company. Two regimes do this: Subpart F and net CFC tested income. The UK Corporation Tax paid by the company may or may not reduce the US charge, depending on elections.

Subpart F and net CFC tested income

Subpart F income is mainly passive income, such as interest and some rents, under 26 US Code section 951. Most trading companies have little of it. Net CFC tested income is the broader measure that replaced GILTI for tax years beginning after 31 December 2025. The renamed rule is in 26 US Code section 951A. It is still calculated on Form 8992, which the IRS currently titles under the old name. For an individual shareholder, the inclusion is taxed at ordinary rates unless an election applies.

The section 962 election

A section 962 election lets an individual be taxed on these inclusions as if they were a US corporation. In return, the individual may claim credit for part of the UK Corporation Tax the company paid. The rule is in 26 US Code section 962. However, later dividends from the company can then be taxed again. Therefore, the election suits some founders and not others, and the figures decide.

Where UK Corporation Tax fits

The UK charges Corporation Tax at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief between. HMRC shows the bands on its page of Corporation Tax rates. A company paying the full rate leaves less room for a US charge after an election. In contrast, a small company paying 19% may leave more. Consequently, a US UK tax accountant for founders models the result each year rather than fixing one approach.

How should a founder take money out of the company?

The choice between salary and dividends has different results on each side of the Atlantic. Salary is deductible for the company and taxed through PAYE. Dividends come from taxed profits and are taxed again on you, in both countries. So the right mix depends on both returns together.

Salary through PAYE

UK salary is earned income for US purposes. You can usually claim credit for the UK income tax on it, or use the foreign earned income exclusion instead. Additionally, National Insurance applies in the UK. The US-UK social security agreement generally stops both countries charging social security on the same work. The IRS explains how these agreements work on its page about totalization agreements.

Dividends and earlier inclusions

Dividends are taxed in the UK at the dividend rates. In the United States, profit already included under Subpart F or net CFC tested income is tracked so that it is not taxed twice when paid out. That tracking happens on Form 5471, year after year. Therefore, the history of the company's US calculations matters as much as this year's figures. A missing year breaks the chain.

What changes when you raise money or sell?

Fundraising, share options and a sale each create cross-border questions. A US UK tax accountant for founders should be involved before the paperwork is signed, not afterwards. Changes to the structure are much harder to unwind than to plan.

Share awards and options

UK companies often use share option schemes for staff and founders. The UK and US tax the same award at different moments, so the credits need matching. Furthermore, a US founder who receives shares subject to restrictions may face US elections with short deadlines. Our guide for founders, fund managers and executives covers equity pay in more detail.

Selling the company

On a sale, the UK may tax the gain as a capital gain. The United States will also tax it, and some of the gain may be recharacterised because the company was a controlled foreign corporation. Notably, the US exclusion for qualified small business stock applies only to US corporations, under 26 US Code section 1202. Hence, a UK company does not qualify. Some founders move to a US holding company before a US raise. That decision has tax results on both sides and needs modelling first.

An illustrative example

Consider a typical case. Ethan is a US citizen living in London who owns all the shares in a UK software company. The company makes a profit and pays Corporation Tax. Ethan takes a modest salary through PAYE and a dividend each spring.

Each year, Ethan's US return includes Form 5471 as a Category 4 and Category 5 filer. The company's profit is tested for net CFC tested income on Form 8992, and a section 962 election is modelled both ways. The company's bank account goes on his FBAR. Meanwhile, his UK Self Assessment return reports the dividend. As a result, the four sets of figures agree because they come from one file.

When should a founder bring in a cross-border preparer?

The best time is before the company is formed, and the next best is the first year of trading. Early advice costs less than repairing several years of missing forms. However, it is never too late to start filing correctly.

Before you incorporate

The choice of entity, the share classes and the founders' ownership split all change the US position. For example, an American who owns 50% exactly may sit in a different Form 5471 category from one who owns 51%. Similarly, adding a US co-founder can turn a company into a controlled foreign corporation. A short review at this stage lets a US UK tax accountant for founders flag the reporting that will follow.

In the first year of trading

The first year sets the pattern. The company's year end, its bookkeeping in pounds and the records of money you put in or take out all feed the US forms. Therefore, agree early how the bookkeeper will share figures with the person preparing your US return. In our experience, founders who do this rarely face a scramble at the October deadline.

How US UK Tax Experts can help

We act as the US UK tax accountant for founders who want both sides handled together. First, we take the UK accounts and restate the figures the US forms need. Next, we prepare Form 5471, Form 8992 and the FBAR, and model any section 962 election. We then prepare your Form 1040 and your UK Self Assessment return from the same file. In addition, we can review a planned fundraise or restructure before it happens.

Our US federal return service covers your Form 1040 and its forms. Our business and corporate tax planning work covers the company side. Furthermore, our guide to US-UK double taxation and the treaty explains how credits move between the two countries.

Conclusion

In summary, a US founder of a UK company files more than most people expect. On the US side, there is Form 5471, often Form 8992, the FBAR and your Form 1040. On the UK side, the company files its accounts and CT600, and you file Self Assessment. Therefore, choose a US UK tax accountant for founders who prepares both sides from the company's own figures. Ultimately, the cost of a missing Form 5471 far exceeds the effort of filing it.

Contact us

Are you an American who owns a UK company and needs a US UK tax accountant for founders? Email us at hello@usuktaxexperts.com, or describe your company through our contact page. We reply within one working day with the filings that apply and the order to do them in.