Do I need to file Form 5471 if I own exactly 50% of a UK limited company?

Usually yes, at least in some years. Exactly 50% does not make the company a CFC on its own, because the CFC test requires US shareholders to own more than 50% by vote or value. But a US person acquiring 10% or more is a Category 3 filer for that year, and a US citizen director is often a Category 2 filer. Attribution from family members, share-class value or a casting vote can add Category 4 or 5.

Are my non-US spouse's shares counted as mine for Form 5471?

It depends on the test. For CFC status, IRC section 958(b)(1) stops stock owned by a nonresident alien being attributed to a US citizen under the family rules, so a 50/50 company with a non-US spouse is not a CFC on that basis. For the Category 4 control test, section 6038(e)(2) applies section 318 family attribution without that exception, so you may be a Category 4 filer.

Does the UK chair's casting vote affect whether my company is a CFC?

It can. Treasury Regulation 1.957-1(b)(1)(ii) treats US shareholders who elect exactly half of the board as holding more than 50% of voting power if their appointee can cast a deciding vote on an evenly divided board or act during a deadlock. The UK Model Articles for private companies give the chair a casting vote unless the articles are amended, so check who chairs the board.

What is the penalty for not filing Form 5471 as a US expat in the UK?

IRC section 6038(b) imposes $10,000 for each annual accounting period of each foreign corporation, plus $10,000 for each 30-day period the failure continues more than 90 days after IRS notice, up to $50,000 extra. Foreign tax credits can also be reduced. Separately, section 6501(c)(8) keeps the assessment period open until three years after the missing information is filed.

Can I use the Streamlined Foreign Offshore Procedures to file missed Forms 5471?

Yes, if your failure was non-wilful and you meet the non-residency test. Under the Streamlined Foreign Offshore Procedures you file three years of returns and six years of FBARs, include delinquent information returns such as Form 5471 with the returns, and certify non-wilful conduct on Form 14653. The IRS states that eligible filers are not subject to information return penalties under the procedures.

Does being a person with significant control at Companies House mean I control the company for US tax?

No. The UK PSC register uses a more than 25% shares or voting rights threshold, or the right to appoint or remove a majority of directors, while Form 5471 control and CFC status require more than 50% of vote or value after US attribution rules. A 50% shareholder is always a PSC in the UK but may or may not have control for US purposes. Use the PSC statements as a cross-check only.

Form 5471 for a 50% UK Company Owner: US Expat Rules

Form 5471 is required from a US citizen who owns exactly 50% of a UK company in at least some years, even though a straight 50/50 split does not, on its own, make the company a controlled foreign corporation. The short answer: exactly 50% fails the 'more than 50%' CFC test on direct ownership, but you are still a Category 3 filer in the year you acquire the shares, and constructive ownership, share-class value, a chair's casting vote or a US-citizen co-owner can each push you into Category 4 or 5 with the full set of schedules.

This guide is written for high-net-worth US citizens living in the UK who hold half of a UK limited company alongside a non-US business partner or a spouse. In the returns we prepare for 50/50 owners, the failure mode we see most often is the assumption that 'not a CFC' means 'no Form 5471'. It does not, and the penalty for getting it wrong starts at $10,000 per company per year.

Why Is Exactly 50% Not Enough to Make a UK Company a CFC?

A controlled foreign corporation (CFC) is a foreign corporation in which US shareholders together own more than 50% of the total combined voting power or more than 50% of the total value of the stock on any day of the corporation's tax year. A US shareholder is a US person who owns 10% or more of the voting power or value. Both definitions appear in the current IRS instructions at https://www.irs.gov/instructions/i5471 (Rev. December 2025) and derive from IRC sections 951(b) and 957(a).

The operative words are 'more than'. If you are the only US person and you own precisely 50% of the votes and precisely 50% of the value, US shareholders own 50%, not more than 50%, and the company is not a CFC on those facts alone. That single percentage point is why so many UK joint ventures, husband-and-wife companies and founder partnerships are structured at 50/50. It is also why the analysis cannot stop at the shareholder register: the CFC test counts direct, indirect and constructive ownership under IRC section 958, and it looks at vote and value separately.

Two tests run in parallel, and failing either one is enough to create a CFC:

Vote test: do US shareholders hold more than 50% of the total combined voting power of all classes of stock entitled to vote, as defined in Treas. Reg. 1.957-1(b)?
Value test: do US shareholders hold more than 50% of the total value of all classes of stock, taking account of dividend rights, capital rights on a winding up and any preference shares?
Ownership counted: direct shares, shares held through other entities under section 958(a), and shares attributed under section 318 as modified by section 958(b).
Timing: the test applies at any time during the foreign corporation's tax year, so a mid-year share issue or transfer can create CFC status for that year.

Which Form 5471 Category Applies to a 50% Owner of a Non-CFC?

If the company is genuinely not a CFC, the 50% owner is not a Category 5 filer, because Category 5 requires a US shareholder of a CFC. Whether Category 4 applies turns on the separate control test discussed below. What almost always applies at some point is Category 3, and sometimes Category 2.

According to the instructions at https://www.irs.gov/instructions/i5471, Category 3 covers a US person who acquires stock in a foreign corporation which, when added to any stock owned on the date of acquisition, meets the 10% stock ownership requirement. Subscribing for 50% of a new UK company on incorporation, buying into an existing company, or becoming a US person while already holding the shares are the typical triggers. Category 3 is event-driven: it applies to the year of the qualifying acquisition or disposition, not every year you simply hold the shares.

Category 2 covers a US citizen or resident who is an officer or director of a foreign corporation in which a US person has acquired stock meeting the 10% stock ownership requirement. A US citizen who is a director of the UK company, as most 50/50 owners are, is therefore commonly a Category 2 filer in the same year a US person (including the director personally) crosses the 10% line. Where one person is in both categories, the instructions say not to duplicate information but to complete all items that apply.

Per the filing chart in the December 2025 instructions, the schedules for these two categories are limited compared with a CFC filing:

Category 2: the identifying information on page 1 and Schedule O, Part I (organisation and officers and directors information).
Category 3: the identifying information on page 1, Schedule A (stock of the foreign corporation), Schedule B Parts I and II (US and foreign shareholders), Schedule C (income statement), Schedule F (balance sheet), Schedule G and separate Schedule G-1, and Schedule O, Part II (acquisitions and dispositions).
Not required for a pure Category 2 or 3 filer: Schedules E, H, I, I-1, J, M, P, Q and R, which belong to Categories 4 and 5.
In a year with no acquisition, no disposition, no control and no CFC status, a 50% owner may have no Form 5471 category at all, although Form 8938 and FBAR obligations for the shareholding and company accounts are separate questions.

Can Your Spouse's Shares Make You a Form 5471 Category 4 Filer?

This is the gap we see missed most often, and it arises because Form 5471 uses two different attribution regimes. Category 4 does not depend on CFC status. It applies to a US person who had control of a foreign corporation during its annual accounting period, and control means owning more than 50% of the total combined voting power or more than 50% of the total value. For this purpose the instructions point to IRC section 6038(e)(2) and Treas. Reg. 1.6038-2(b) and (c), not to section 958(b).

Section 6038(e)(2) applies the ordinary section 318(a) constructive ownership rules with two limited modifications: downward attribution under section 318(a)(3)(A) to (C) is not applied to make a US person own stock owned by a non-US person, and a 10% threshold replaces 50% in section 318(a)(2)(C). Family attribution under section 318(a)(1), which treats an individual as owning stock held by a spouse, children, grandchildren and parents, is not switched off for a non-resident alien spouse in that text. You can read the statute at https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section6038&num=0&edition=prelim.

Contrast the CFC test. Section 958(b)(1) says that, in applying section 318(a)(1)(A), stock owned by a nonresident alien individual is not considered as owned by a citizen or resident alien. So where a US citizen owns 50% and her non-US spouse owns the other 50%, the spouse's shares are not attributed to her for CFC purposes and the company is not a CFC on that basis. But on the face of section 6038(e)(2) the spouse's shares are attributed to her for the control test, which suggests she constructively owns 100% and is a Category 4 filer, with Category 4's much larger schedule set, even though no Subpart F or tested income inclusion arises. This is a technical reading of the statute and regulation; it should be confirmed on your specific facts before you file, but it is the conservative position we start from.

The same family-attribution logic applies in reverse where both 50% holders are US citizens, for example a married couple who are both US citizens living in London. Each spouse is treated as owning the other's shares for both tests, US shareholders own 100%, the company is a CFC, and each spouse will usually be a Category 4 and Category 5a filer. The instructions state that a filer described in both Category 4 and Category 5a checks only the Category 4 box, and one Form 5471 can in some cases be filed jointly for related filers under the multiple-filer rules in the instructions.

How Did the 2017 and 2025 Tax Acts Change Downward Attribution?

Downward attribution is the rule in section 318(a)(3) that treats an entity as owning stock held by its owners. Before 2018, section 958(b)(4) stopped that rule from making a US person the owner of stock held by a foreign person. The 2017 Tax Cuts and Jobs Act repealed section 958(b)(4), which meant that stock owned by a foreign person could be attributed down to a related US entity, creating many unexpected CFCs, mostly in multinational groups.

Public Law 119-21, enacted in 2025, added section 958(b)(4) back and created a new section 951B dealing with foreign controlled United States shareholders of foreign controlled foreign corporations. Both changes apply to taxable years of foreign corporations beginning after 31 December 2025. For a UK company with a 31 March year end, that generally means the accounting period beginning 1 April 2026 onwards. The statutory text is at https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section958&num=0&edition=prelim.

For an individual 50/50 owner, downward attribution rarely changes the answer on its own, because it concerns stock attributed to entities rather than family members. It becomes relevant where your co-owner is a company or other entity that also owns a US company, or where you hold your 50% through your own US or UK holding company. If any entity sits in the chain, map the ownership for each accounting period separately around the 1 January 2026 effective date.

Vote or Value: When Does a 50/50 UK Company Tip Over?

Many UK private companies are not a simple single class of ordinary shares. Alphabet shares, preference shares, non-voting growth shares and bespoke shareholder agreements are common, particularly where the shares are held by spouses for dividend flexibility. Each of these can move a US owner above 50% on one of the two tests even when the headcount looks equal.

Different share classes: if you hold 50% of the voting A shares but also all of a non-voting B class carrying dividend or capital rights, your share of total value may exceed 50%, making the company a CFC on the value test.
Chair's casting vote: Treas. Reg. 1.957-1(b)(1)(ii), at https://www.ecfr.gov/current/title-26/section-1.957-1, treats US shareholders who elect exactly one-half of the board as having more than 50% of voting power if a person they elected or designated can cast a vote deciding an evenly divided board, or can exercise the board's powers during a deadlock.
UK Model Articles: article 13 of the model articles for private companies at https://www.legislation.gov.uk/uksi/2008/3229/schedule/1 gives the chair of a directors' meeting a casting vote where votes are equal, unless the articles are amended. If the US owner is, or appoints, the chair, the casting-vote rule in the regulation needs careful review.
Shareholder agreements: Treas. Reg. 1.957-1(b)(2) disregards formal voting rights where there is an express or implied agreement that a shareholder will not vote, or will vote only in a specified manner, and looks at where voting power really lies.
Value shifts during the year: a new share issue, buy-back or transfer on any single day can create CFC status for the whole tax year of the company.

UK company law and US tax law measure control differently. A UK person with significant control is someone holding more than 25% of shares or voting rights, or the right to appoint or remove a majority of directors, as explained at https://www.gov.uk/guidance/people-with-significant-control-pscs. Being registered as a PSC at Companies House does not decide your Form 5471 category, but the PSC nature-of-control statements are a useful cross-check against the voting analysis in your US return.

What Changes If the UK Company Is a CFC Through Attribution?

Once attribution, value or a casting vote makes the company a CFC, the 50% owner is a US shareholder of a CFC and, typically, also a Category 4 filer. The Form 5471 then includes the full financial and income-inclusion schedules. Per the December 2025 filing chart, Category 4 requires Schedules A, B, C, E, E-1, F, G, G-1, H, I, I-1, J, M, P, Q and R (Schedule H-1 only for applicable corporations under the corporate alternative minimum tax), and Category 5a requires Schedule B Part II, E, E-1, G, G-1, H, I, I-1, J, P, Q and R.

Schedule I-1: information for global intangible low-taxed income, which P.L. 119-21 renames net CFC tested income for tax years beginning after 2025; it reports the CFC's tested income or loss and related items for your inclusion calculation on Form 8992.
Schedule J: accumulated earnings and profits of the CFC, tracked by category, which determines how later dividends from the UK company are treated.
Schedule P: previously taxed earnings and profits, so that dividends paid out of income already taxed under Subpart F or GILTI are not taxed twice.
Schedule Q: CFC income by CFC income groups, feeding Subpart F, tested income and foreign tax credit calculations.
Schedule M: transactions between the CFC and its shareholders or related persons, such as director's loan accounts, salaries and management charges.

For a UK trading company, the UK corporation tax paid is relevant to the GILTI high-tax exclusion election and to foreign tax credits, but whether those reliefs eliminate the US inclusion depends on the effective rate computed under US principles, not the headline UK rate. That calculation should be run each year rather than assumed.

Could the Company Be a PFIC Instead?

If the UK company is not a CFC as to you, the passive foreign investment company rules come back into view. Under IRC section 1297(a), a foreign corporation is a PFIC if 75% or more of its gross income is passive or at least 50% of its assets, on average, produce or are held to produce passive income. An operating UK consultancy or trading business will usually fail both tests, but a 50/50 company that has become a cash box or holds a property or investment portfolio may not. Section 1297(d) generally switches off PFIC treatment for a US shareholder of a CFC, so for a non-CFC 50% owner that shelter is not available. PFIC reporting is on Form 8621, described at https://www.irs.gov/instructions/i8621.

Worked Scenario: Three Versions of the Same 50/50 London Company

Illustration only; names and figures are hypothetical. Emma is a US citizen living in London. In June 2025 she subscribes for 50 of the 100 ordinary shares of a new UK consultancy, Thameside Strategy Ltd, and is appointed a director. The company has a 31 March year end, one class of ordinary shares and the unamended Model Articles. Three versions of her co-owner produce three different Form 5471 outcomes.

Version A, unrelated British business partner: Daniel, a UK national with no US status and no family relationship to Emma, holds the other 50 shares. US shareholders own exactly 50% by vote and value, so the company is not a CFC. Daniel's shares are not attributed to Emma under any rule, so she lacks control and is not Category 4. For her 2025 US return, she files Form 5471 as a Category 3 filer because she acquired 50% during the year, and as a Category 2 filer because she is a director of a company in which a US person acquired 10% or more. She completes page 1, Schedules A, B, C, F, G, G-1 and Schedule O Parts I and II. For 2026, with no share movement, she may have no 5471 category, unless the board is chaired by her with the Model Articles' casting vote, in which case the analysis in Treas. Reg. 1.957-1(b)(1)(ii) must be run.

Version B, British husband: the other 50 shares are held by her husband James, a UK national and nonresident alien. For CFC purposes, section 958(b)(1) blocks attribution of James's shares to Emma, so the company is still not a CFC and there is no GILTI or Subpart F inclusion. For the Category 4 control test under section 6038(e)(2), however, family attribution is not blocked on the face of the statute, so Emma is treated as constructively owning 100% and, on our reading, files as a Category 4 filer as well as Category 2 and 3 in 2025, and Category 4 in each later year while the facts hold.

Version C, US citizen husband: James is also a US citizen. Each spouse's shares are attributed to the other, US shareholders own 100%, and Thameside is a CFC from the day it was formed. Emma and James are each Category 4 and Category 5a filers (checking Category 4 only), the Schedule I-1 tested income calculation applies, and the UK corporation tax paid becomes central to the foreign tax credit and high-tax exclusion analysis.

What Are the Form 5471 Penalties and How Do You Fix Missed Years?

Under IRC section 6038(b), failing to furnish Form 5471 information carries a penalty of $10,000 for each annual accounting period of each foreign corporation. If the failure continues more than 90 days after the IRS mails notice, an additional $10,000 applies for each 30-day period or part of one, capped at $50,000 of additional penalty. Section 6038(c) separately reduces foreign tax credits by 10%, increasing by 5% for each further three-month period of continued failure, subject to limits in the statute. IRS guidance on the form is at https://www.irs.gov/forms-pubs/about-form-5471.

The penalty is only half the problem. Under IRC section 6501(c)(8), when a required Form 5471 is not filed, the assessment period for the related tax return, event or period does not expire until three years after the IRS is furnished the information. If the failure was due to reasonable cause and not wilful neglect, the extension is limited to the items related to the failure. In practice, an unfiled 5471 can leave an entire year of your US return open indefinitely.

The two main remediation routes for a US citizen resident in the UK are:

Streamlined Foreign Offshore Procedures, at https://www.irs.gov/individuals/international-taxpayers/us-taxpayers-residing-outside-the-united-states, for non-wilful taxpayers meeting the non-residency test (no US abode and at least 330 full days outside the US in one or more of the last three years). You file the most recent three years of returns and six years of FBARs, include delinquent information returns such as Form 5471 with the returns, and sign Form 14653. Eligible filers are not subject to information return penalties under the procedures.
Delinquent International Information Return Submission Procedures, at https://www.irs.gov/individuals/international-taxpayers/delinquent-international-information-return-submission-procedures, for taxpayers who reported all income and paid all tax but omitted information returns, are not under civil examination or criminal investigation and have not been contacted by the IRS about the returns. Late forms are attached to an amended return with a reasonable cause statement. The IRS states that penalties may be assessed on processing without considering the statement, so be prepared to respond to follow-up notices.
Late FBARs for the company's UK bank accounts, if you have signature authority or a financial interest, are filed through FinCEN's BSA E-Filing System at https://bsaefiling.fincen.treas.gov with a reason for late filing, or within the Streamlined submission.

How Should UK Filings and US Form 5471 Line Up?

The Form 5471 income statement and balance sheet are prepared from the UK statutory accounts, translated into US dollars and adjusted to US principles where the schedules require it. We reconcile the Schedule C and F figures to the accounts filed at Companies House and to the CT600 filed with HMRC, and we document the exchange rate methodology used, because inconsistencies between UK filings and the 5471 are the first thing an examiner compares. Dividends you receive from the UK company are taxed in the UK under the dividend rules explained at https://www.gov.uk/tax-on-dividends, and on your US return, with the treatment depending on whether earnings were previously taxed under the CFC rules.

Keep a single ownership memo for each accounting period covering the shareholder register, share rights in the articles, board composition, who chairs and whether a casting vote exists, any shareholder agreement, and every family relationship between holders. That memo drives the category analysis each year and is the evidence you will need if the IRS ever questions why you checked Category 3 rather than Category 4.

Key Takeaways for 50/50 UK Company Owners

Exactly 50% by vote and value, with an unrelated non-US co-owner, means no CFC, but Category 3 applies in the year of acquisition and Category 2 applies to US directors.
A non-US spouse's shares are not attributed to you for the CFC test, but on the face of section 6038(e)(2) they are attributed for the Category 4 control test.
A US citizen spouse as co-owner almost always makes the company a CFC and both of you Category 4 filers.
Share classes, a chair's casting vote and shareholder agreements can each tip a 50/50 company over 50%.
Section 958(b)(4) is restored for foreign corporation tax years beginning after 31 December 2025, which matters where entities sit in the ownership chain.
Missed forms carry a $10,000 penalty per company per year and keep the assessment period open; Streamlined and the delinquent information return procedures are the main fixes.