Do I have to file Form 5471 if my UK consultancy company made no profit?

Usually yes. Form 5471 is an information return driven by your ownership and role in a foreign corporation under sections 6038 and 6046, not by whether the company earned anything. A US owner of a UK consultancy company generally files even in a loss or dormant year. The penalty for not filing starts at 10,000 US dollars per form per year, so the obligation should never be ignored because the company was quiet.

Does leaving profit in my UK company defer the US tax on it?

No, not for most of it. Under the GILTI rules in section 951A, a US shareholder of a controlled foreign corporation includes a share of the company's tested income each year, whether or not it is distributed. A consultancy with few tangible assets sees almost all of its profit become GILTI. Retaining the cash changes how the company uses it, but it does not push the US tax out to the year you finally take a dividend.

How do Form 5471 and Form 8992 work together for GILTI?

Form 5471 reports the UK company's earnings, tested income, and qualified business asset investment as an information return. Form 8992, the U.S. Shareholder Calculation of GILTI, then uses those figures to compute your actual GILTI inclusion: net CFC tested income reduced by a net deemed tangible income return. Form 5471 supplies the raw numbers, and Form 8992 turns them into the amount reported on your individual return. A consultancy owner generally needs both.

What is a Section 962 election and should I make one?

A Section 962 election lets an individual be taxed on GILTI and subpart F inclusions as if they were a corporation: at the corporate rate, with a deemed-paid credit under section 960 for the UK corporation tax the company paid, and with the section 250 GILTI deduction. It often reduces US tax on retained profit where UK corporation tax is meaningful. It is made annually and is hard to revoke, so it should be modelled each year rather than assumed.

Can I credit the UK corporation tax my company paid against my US GILTI tax?

Not automatically as an individual. The deemed-paid foreign tax credit under section 960 for a company's own corporate taxes is available to domestic corporations, not to individuals filing a standard return. Without a Section 962 election, a US founder can be taxed on the GILTI inclusion at individual rates with no personal credit for the UK corporation tax already paid, which is why the election is central to avoiding double taxation on retained profit.

Did the 2025 US tax changes affect GILTI on my UK company?

Yes. For tax years beginning after 31 December 2025, the section 951A inclusion is renamed net CFC tested income and the QBAI-based net deemed tangible income return deduction is removed. For a consultancy that already held little tangible property, almost all profit was GILTI anyway, so the practical effect is limited but it removes any residual shelter. The 2025 tax year, filed in 2026, is the last under the original GILTI rules, and exact rates should be confirmed for each year.

Form 5471 & GILTI: UK Consultancy Retained Profit

Form 5471 is the information return a US owner of a UK consultancy company files for that company, and it is also where an uncomfortable truth about retained profit becomes unavoidable: leaving money inside a UK limited company does not shelter it from US tax. Under the controlled foreign corporation (CFC) rules, a US person who owns a UK consultancy company is generally taxed each year on that company's profit as global intangible low-taxed income, known as GILTI, reported alongside Form 5471 and computed on Form 8992, whether or not a single pound is ever distributed. For a one-person consultancy that owns little more than a laptop, almost all of the profit can fall into GILTI, which is the opposite of the deferral many founders assume they are getting by keeping cash in the company.

Does Form 5471 apply to a UK consultancy company you own?

Yes. Form 5471 is titled the Information Return of U.S. Persons With Respect To Certain Foreign Corporations, and the IRS requires certain US citizens and residents who are officers, directors, or shareholders in certain foreign corporations to file it, satisfying the reporting obligations under Internal Revenue Code sections 6038 and 6046. A UK private limited company is a foreign corporation for this purpose. If you are a US citizen or green card holder who owns a UK consultancy company, you are almost certainly within one of the Form 5471 filer categories, and if you own the whole company you are both its controlling shareholder and a US shareholder of a CFC. The obligation does not depend on the company making a profit or distributing anything; it is triggered by your ownership and role.

The definitions do the heavy lifting here. A US shareholder is a US person who owns, directly, indirectly, or constructively, 10% or more of the total combined voting power or total value of a foreign corporation's stock. A controlled foreign corporation is a foreign corporation in which US shareholders together own more than 50% of the vote or value on any day of the tax year. A sole US founder of a UK consultancy company owns 100% of the shares, so the company is unambiguously a CFC and the founder is unambiguously a US shareholder. That dual status is what pulls in both Form 5471 and the GILTI regime, instead of letting the company be treated as a passive foreign holding reported only when it pays a dividend.

What is GILTI, and why does it reach retained profit?

GILTI, global intangible low-taxed income, is a current-year income inclusion. Enacted as section 951A, it requires a US shareholder of a CFC to include in gross income each year a share of the company's tested income that exceeds a routine return on the company's tangible business assets. The inclusion is mandatory and annual. It does not wait for a distribution, and it does not depend on cash leaving the company. This is the mechanism that defeats the retained-profit strategy: the US shareholder is taxed on the company's earnings in the year they arise, inside the company, regardless of whether the founder takes the money out as salary or dividend. Retaining profit changes what the company can do with the cash; it does not change when the US tax falls due.

How does Form 8992 calculate GILTI alongside Form 5471?

Form 8992, the U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI), is where the inclusion is actually worked out, using figures that originate on Form 5471. In broad terms, a US shareholder's GILTI is the net CFC tested income for the year reduced by a net deemed tangible income return. The net deemed tangible income return is 10% of the company's qualified business asset investment, or QBAI, which is its tangible, depreciable business property, reduced by certain interest expense. Whatever tested income remains after that routine-return deduction is GILTI. The Form 8992 instructions require that the filer owned the stock, within the meaning of section 958(a), on the last day of the CFC's tax year in which the company was a CFC. Form 5471 supplies the earnings, QBAI, and tested-income figures; Form 8992 turns them into the number that lands on the individual return.

Why does a one-person consultancy turn almost all its profit into GILTI?

Because a consultancy has almost no QBAI. The net deemed tangible income return exists to carve out a normal return on factories, equipment, and other tangible depreciable assets that a capital-intensive business owns. A consultancy earns its money from people, relationships, and know-how, not from plant and machinery; a typical one-person UK consultancy company might own a laptop, a phone, and little else. With QBAI close to zero, the routine-return deduction is close to zero, so almost the entire tested income becomes GILTI. The regime was designed to tax exactly this kind of mobile, intangible-driven profit, and a professional services company sits squarely in its path rather than at its edge.

Consulting fees are active service income that generally counts as tested income feeding the GILTI calculation.
Little or no tangible depreciable property means a negligible QBAI, so the net deemed tangible income return that would otherwise shelter profit is close to zero.
No distribution is required for the inclusion to arise; GILTI is taxed in the year the company earns the profit.
Because the shelter is tied to tangible assets a consultancy does not hold, the proportion of profit exposed to GILTI is far higher than for an asset-heavy trading company.

Why doesn't leaving profit in the company defer US tax the way owners expect?

Many founders picture a UK limited company as a deferral vehicle: pay UK corporation tax now, leave the after-tax profit inside the company to reinvest, and face US tax only when they finally take a dividend or a larger salary. Before 2018, the subpart F regime did allow a good deal of active foreign business income to be deferred until it was repatriated. The 2017 Tax Cuts and Jobs Act changed that for US shareholders of CFCs by introducing GILTI, which sweeps most active CFC earnings into the shareholder's income each year. For the owner of a UK consultancy company, that means the old mental model is simply wrong. The profit the company retains is not sitting outside the US tax net waiting for a distribution; most of it is being taxed to the shareholder as it is earned, with the eventual dividend handled separately under the previously taxed earnings and profits rules so the same income is not taxed as US income twice.

How does the UK corporation tax the company pays interact as a credit?

This is where double taxation becomes a live risk. The UK company pays UK corporation tax on its profits to HMRC at the company level. A US individual shareholder, however, cannot normally claim a credit for a foreign corporation's own corporate-level taxes against their personal US tax. The deemed-paid, or indirect, foreign tax credit under section 960 is available to domestic corporations, not to individuals filing a standard Form 1040. So a US founder who simply reports a GILTI inclusion on their individual return, with no further election, is taxed at individual rates on that inclusion while getting no personal credit for the UK corporation tax the company already paid on the same profit. The result can be substantial double taxation on retained profit that the founder never even received in cash.

Can the Section 962 election reduce the US tax on retained profit?

For most UK consultancy owners it is the key planning lever. A Section 962 election lets an individual US shareholder elect to be taxed on their section 951(a) and section 951A inclusions as if they were a domestic corporation. Instead of individual rates with no corporate credit, the inclusion is taxed at the corporate rate under section 11, the individual becomes entitled to the deemed-paid foreign tax credit under section 960 for the UK corporation tax the company paid, and under the section 250 regulations the electing individual can claim the GILTI deduction otherwise available to corporations. Where UK corporation tax on the retained profit is meaningful, this combination often reduces or eliminates the immediate US tax on the GILTI inclusion. The election is made year by year on the return and cannot be revoked without IRS consent, so it has to be modelled for each filing year rather than set once and forgotten.

The inclusion is taxed at the section 11 corporate rate rather than the shareholder's individual rate.
A section 960 deemed-paid foreign tax credit becomes available for the UK corporation tax the company paid, directly addressing the double-tax problem.
The section 250 GILTI deduction, normally a corporate benefit, can be claimed by the electing individual.
The trade-off: a later actual distribution of those earnings is taxed again to the individual as a dividend to the extent it exceeds the US tax paid at the time of the inclusion, under section 962(d).
Because the election is annual and irrevocable without consent, it should be compared against the default treatment every year as profits, UK tax, and distribution plans change.

What changed for tax years beginning after 2025?

Legislation enacted in 2025 reshaped this regime for tax years beginning after 31 December 2025. The section 951A inclusion is being renamed net CFC tested income, and, most relevant to consultancy owners, the net deemed tangible income return deduction tied to QBAI has been removed. For a services company that already held little QBAI, that change is close to academic because almost all of its profit was already GILTI, but it removes any residual tangible-asset shelter and confirms the direction of travel. The 2025 tax year, filed in 2026, is the last year under the original GILTI framework. The headline rates, the size of the section 250 deduction, and the foreign-tax-credit mechanics are all set by statute and are being adjusted under the new rules, so the exact figures should always be confirmed for the specific filing year rather than assumed. What does not change is the core point of this article: the current-year inclusion on retained profit continues, and for most consultancy owners it does not shrink.

Worked scenario: a US founder whose UK consultancy retains its profit

Illustrative scenario with assumed facts for illustration only. Maya is a US citizen living in London who owns 100% of a UK consultancy company. The company earns consulting fees, pays its UK corporation tax, and Maya deliberately leaves most of the after-tax profit in the company to build a cash reserve, drawing only a modest salary. She assumes the retained profit is outside the US tax net until she eventually pays herself a dividend.

Because she owns the whole company, it is a CFC and she is a US shareholder, so she must file Form 5471. The company owns only a laptop and some software, so its QBAI is negligible and its net deemed tangible income return is close to zero. On Form 8992, almost all of the company's tested income becomes her GILTI inclusion for the year, even though she took nothing extra out. Filing Form 5471 but ignoring Form 8992 would leave that inclusion off her return and understate her income.

If Maya does nothing further, the GILTI is taxed at her individual rates with no personal credit for the UK corporation tax her company already paid, raising the prospect of the same profit being taxed on both sides of the Atlantic. If instead she makes a Section 962 election, she is taxed on the inclusion at corporate rates, claims a deemed-paid credit for the UK corporation tax, and takes the section 250 GILTI deduction, which usually produces a far better result where UK corporation tax is substantial. When she later distributes the retained profit, the previously taxed earnings and profits rules stop a second US income tax on the same earnings, although the Section 962 election carries its own rules for distributions above the tax already paid. The planning happens at the time of the inclusion, not at the time of the dividend.

Common mistakes UK consultancy owners make with Form 5471 and GILTI

Assuming retained profit is deferred for US purposes and only taxable on distribution, when GILTI taxes most of it in the year it is earned.
Filing Form 5471 but omitting Form 8992, so the GILTI inclusion that Form 5471's figures feed is never actually reported on the individual return.
Overlooking the Section 962 election and paying individual-rate US tax on the inclusion with no credit for the UK corporation tax the company paid.
Expecting a laptop-and-software consultancy to generate enough QBAI to shelter meaningful profit through the net deemed tangible income return.
Missing the Form 5471 filing altogether and exposing the owner to the section 6038 penalty, which starts at 10,000 US dollars per form per year.
Double-counting a later dividend as a fresh US income tax event when the previously taxed earnings and profits rules already prevent a second income tax on the same earnings.

How US-UK Tax prepares Form 5471 and GILTI for UK consultancy owners

For a high-net-worth founder, getting Form 5471 and the GILTI calculation right is tax preparation and compliance work, not a once-a-year afterthought. We prepare the Form 5471 for your UK consultancy company, build the Form 8992 GILTI computation from the company's tested income and QBAI, and model whether a Section 962 election produces a better result than the default individual treatment for your specific year and UK corporation tax position. If you have retained profit in a UK company and want it handled correctly, our US tax services and cross-border tax planning teams prepare the full CFC filing set, and our business and corporate tax and high-net-worth specialists coordinate the UK and US sides so the same profit is not taxed twice and nothing is missed.