Do I have to file Form 8992 if my UK company made a loss?

Yes. If you are a US shareholder of a controlled foreign corporation you file Form 8992 with your return regardless of the result. A tested loss company still occupies a row on Schedule A, and its tested loss reduces net CFC tested income from any other controlled foreign corporation you own. If Part I produces zero or less, no inclusion arises, but the form and the underlying Form 5471 with Schedule I-1 are still required. A nil inclusion is an outcome of the calculation, not an exemption from filing it.

Is Form 8992 filed separately from my Form 1040?

No. Form 8992 is attached to your income tax return and is due at the same time as that return, including extensions. For an individual, the inclusion computed at Part II, line 5 is carried to Schedule 1 (Form 1040), line 8o. Corporate shareholders report it on line 17 of Form 1120, Schedule C. Domestic partnerships no longer complete Form 8992 for this purpose and instead report through Schedule K-2 (Form 1065), Part VI and Schedule K-3 (Form 1065), Part VI.

Why is my inclusion almost as large as my UK company profit?

Because the only reduction available for years before 2026 was the net deemed tangible income return, which is 10 percent of qualified business asset investment less specified interest expense. Qualified business asset investment counts only tangible depreciable property, valued on the US alternative depreciation system as a four-quarter average. A UK consulting, investment or technology company holds very little such property, so the reduction is small. For tax years of foreign corporations beginning after 31 December 2025 that reduction is repealed entirely and the whole of net CFC tested income is included.

Does GILTI still exist for the 2026 tax year?

The regime continues under a new name and revised mechanics. For tax years of foreign corporations beginning after 31 December 2025, the One Big Beautiful Bill Act renamed the measure net CFC tested income, repealed the net deemed tangible income return, set the section 250 deduction at 40 percent and reduced the section 960(d) haircut on deemed paid foreign taxes from 20 percent to 10 percent. Because a UK company with a 31 March year end has a period that began before 1 January 2026, that company still applies the previous rules to the period ending 31 March 2026.

Can the UK corporation tax my company paid offset the US tax on my inclusion?

Not on a default individual filing. The UK corporation tax was paid by the company, and an individual shareholder reporting the inclusion at ordinary rates gets no credit for it. The election under section 962 treats the individual as a domestic corporation for this purpose, giving access to the deemed paid credit under section 960 with a section 78 gross-up, and to the section 250 deduction. The election is annual, made by statement with the return, and changes the treatment of later distributions, so it is modelled rather than applied automatically.

What is the penalty for not filing Form 8992?

The Instructions for Form 8992 point to the penalties under sections 6038(b) and 6038(c). Under that regime, 10,000 US dollars applies for each annual accounting period of each foreign corporation for which required information is not furnished, with a further 10,000 US dollars for each 30-day period beginning more than 90 days after the IRS mails notice, capped at 50,000 US dollars per failure, plus a reduction in foreign tax credits under section 6038(c). A missing Form 8992 also usually indicates missing Forms 5471, which can keep the tax year open to assessment.

Form 8992: GILTI Calculation for UK Company Owners

Form 8992 is the return a US shareholder files to compute a GILTI inclusion from a controlled foreign corporation, and if you own a UK limited company it is the form that converts your company's retained profit into taxable income on your personal US return whether or not a penny leaves the company. The arithmetic itself is two lines long: your pro rata share of net CFC tested income, less your net deemed tangible income return, equals the inclusion you carry to Schedule 1 (Form 1040), line 8o. Everything demanding about the exercise happens upstream, on Schedule I-1 of Form 5471, before a single figure reaches Form 8992 at all.

That is also why the form is so widely mis-prepared for UK companies. A US founder running a consultancy, an investment management business or a technology company through a UK Ltd holds almost no depreciable tangible property, so the deemed tangible income return that is supposed to shelter a routine return on assets is close to nothing, and effectively the whole of the company's trading profit lands on the US return. Add the rewrite of section 951A that applies to tax years of foreign corporations beginning after 31 December 2025, under which that shelter disappears entirely and the regime is renamed net CFC tested income, and there are now two versions of this calculation in circulation at once. This article works through both.

Who has to file Form 8992 if they own a UK limited company?

The Instructions for Form 8992 set the test in two stages. You file if you were a US shareholder of at least one foreign corporation at any point during that foreign corporation's tax year and you owned stock in it on the last day of the year on which the corporation was a controlled foreign corporation. A US shareholder, under section 951(b), is a US person owning directly, indirectly or constructively 10 percent or more of the total combined voting power of all classes of voting stock, or 10 percent or more of the total value of the shares. A foreign corporation is a controlled foreign corporation under section 957 when US shareholders together hold more than 50 percent of vote or value on any day of its tax year.

For a UK limited company the practical consequences are these:

A UK Ltd wholly owned by one US citizen resident in London is a controlled foreign corporation from incorporation. There is no de minimis turnover, profit or asset threshold that switches the regime off.
A UK Ltd owned 60 percent by a US citizen and 40 percent by a British co-founder is still a controlled foreign corporation, because the US shareholder alone exceeds 50 percent. The inclusion is computed on the pro rata share only.
Shares held by a US shareholder's spouse, children, parents or a controlled entity are attributed under the section 958 constructive ownership rules, and family holdings routinely tip a company over the 50 percent line where the share register alone suggests otherwise.
Filing Form 5471 does not by itself discharge the obligation. Form 8992 is a separate form attached to the income tax return, due with that return including extensions.
Domestic partnerships no longer complete Form 8992 for this purpose. They report the underlying amounts on Schedule K-2 (Form 1065), Part VI and Schedule K-3 (Form 1065), Part VI, and the partners run their own computation.

One nuance matters for founders with mixed ownership. The One Big Beautiful Bill Act restored section 958(b)(4), so downward attribution from a foreign parent to a US subsidiary no longer creates a controlled foreign corporation, and added a new section 951B addressed at foreign controlled US shareholders and foreign controlled foreign corporations, both for foreign corporation tax years beginning after 31 December 2025. Ownership charts that were settled in 2023 have to be re-tested before a 2026 Form 8992 is prepared.

Where do the numbers on Form 8992 actually come from?

Form 8992 is a summary sheet. It performs no analysis of its own. Every figure on it is imported from Schedule I-1 of Form 5471, the schedule headed Information for Global Intangible Low-Taxed Income, which is required of Form 5471 category 4, 5a, 5b and 5c filers. Schedule A of Form 8992, which non-consolidated filers use, is a transcription grid: one row per controlled foreign corporation, with columns pulling directly from Schedule I-1.

The mapping the instructions prescribe is worth memorising if you are reviewing a prepared return:

Schedule A columns (c) and (d), tested income and tested loss, come from Schedule I-1, line 6.
Columns (e) and (f) convert those to your pro rata share under Regulations sections 1.951A-1(d)(2) and 1.951A-1(d)(4).
Column (g), pro rata share of qualified business asset investment, comes from Schedule I-1, line 8, and is entered only for tested income CFCs.
Column (h) carries the tested loss QBAI amount, defined as 10 percent of what the QBAI of a tested loss CFC would have been had it instead been a tested income CFC.
Column (i), tested interest income, comes from Schedule I-1, line 10c. Column (j), tested interest expense, comes from Schedule I-1, line 9d.
Columns (k) and (l), the GILTI allocation ratio and the amount of GILTI allocated to each tested income CFC, are completed last, after Parts I and II have been finished.

Two structural points follow. If the Schedule I-1 is wrong, Form 8992 will be internally consistent and still wrong, which is the failure pattern we see most often on reviewed returns. And the instructions are explicit that where a US shareholder does not file a Schedule I-1 for a controlled foreign corporation, for instance under the multiple filer exception, that shareholder must still produce the amounts as if it had.

Members of a US consolidated group work differently: the group files a single Form 8992 with Schedule B rather than Schedule A, allocating within the group under Regulations section 1.1502-51. An S corporation that has elected entity treatment under Proposed Regulations section 1.958-1(e) files Form 8992 with its Form 1120-S and reports the result on Schedule K, line 10, using code E.

What is net CFC tested income?

Net CFC tested income is the aggregate of your pro rata shares of tested income from each controlled foreign corporation, reduced by the aggregate of your pro rata shares of tested loss, and it cannot go below zero. Tested income under section 951A(c)(2) starts from the company's gross income and removes specific categories before deductions properly allocable to the remainder are subtracted.

The exclusions are what make the computation UK-specific. Income effectively connected with a US trade or business comes out. Subpart F income comes out, which matters where a UK company holds surplus cash generating interest or receives royalties from connected parties. Income excluded from foreign base company income by reason of the high-tax election under section 954(b)(4) comes out, which is the mechanism behind the separate high-tax exclusion analysis covered in our companion article rather than here. Dividends from related persons come out, so an intra-group dividend from a UK trading subsidiary to a UK holding company is not double counted. Foreign oil and gas extraction income comes out.

What remains is reduced by deductions properly allocable to it, and this is where UK statutory accounts and a US tested income figure part company. The starting point for Schedule I-1 is not the profit shown in the accounts filed at Companies House, and it is not the taxable total profits on the CT600. It is income and expense measured under US federal tax principles, translated from sterling, with the Form 5471 convention that exchange rates are reported using a divide-by convention rounded to at least four decimal places. Depreciation, provisions, leases, share-based payments, research and development relief and pension costs all commonly move between the two measures.

What counts as QBAI for a UK limited company?

Qualified business asset investment is the average of a controlled foreign corporation's aggregate adjusted bases, measured at the close of each quarter of the tax year, in specified tangible property used in the production of tested income and depreciable under section 167. Critically, section 951A(d) requires the adjusted basis to be determined under the alternative depreciation system of section 168(g). Ten percent of that figure is the deemed tangible income return.

This is where preparation for a UK company most often goes wrong, and it goes wrong in both directions. UK companies claim the Annual Investment Allowance or full expensing against corporation tax, so plant and machinery bought in a year is frequently written down to nil in the UK capital allowances pool immediately. Preparers read across from the UK pool, see a tax written down value of zero, and enter zero QBAI. That is incorrect. The US adjusted basis of the same asset must be rebuilt independently under the section 168(g) alternative depreciation system, which uses straight line recovery over the ADS class life. An asset fully relieved for UK corporation tax in year one can still carry substantial US adjusted basis for years afterwards, and still generate a deemed tangible income return.

The reverse error is just as common: taking tangible fixed assets net book value from the UK balance sheet and multiplying by 10 percent. That fails because UK book depreciation policy is not the alternative depreciation system, the measure required is a four-quarter average rather than a year-end snapshot, and only property used in producing tested income qualifies.

Practical points we work through when building QBAI for a UK company:

Property must be tangible and depreciable under section 167. Goodwill, customer lists, software developed in-house, trademarks and the value of a client book do not qualify, which is why professional services and technology companies routinely produce a QBAI figure near zero.
The measure is the average of adjusted bases at the close of each of the four quarters, so an asset bought in the final quarter contributes only a fraction of its basis.
Basis must be tracked in the company's functional currency and translated consistently, not converted at a single spot rate on the balance sheet date.
Assets used partly to produce excluded income, such as property servicing a US effectively connected activity or a high-tax excluded stream, must be apportioned rather than counted in full.
Property transferred in from a related party shortly before a year end is subject to anti-abuse scrutiny under the section 951A regulations and will not reliably create a shield.

How does the Form 8992 calculation run, line by line?

Part I aggregates the Schedule A totals. It takes the sum of your pro rata share of net tested income, subtracts the sum of your pro rata share of net tested loss, and produces net CFC tested income. If that result is zero or less, the computation stops there and no inclusion arises, though the form is still prepared and filed.

Part II converts net CFC tested income into the inclusion:

Line 1 carries down net CFC tested income from Part I.
Line 2 is the deemed tangible income return, 10 percent of your pro rata share of aggregate QBAI.
Line 3a is your aggregate pro rata share of tested interest expense, from Schedule A column (j).
Line 3b is your aggregate pro rata share of tested interest income, from Schedule A column (i).
Line 3c is specified interest expense, line 3a less line 3b, floored at zero.
Line 4 is the net deemed tangible income return, line 2 less line 3c.
Line 5 is the GILTI inclusion, line 1 less line 4, reported on Schedule 1 (Form 1040), line 8o for individuals, or line 17 of Form 1120, Schedule C for corporate shareholders.

The specified interest expense mechanic at lines 3a to 3c catches many UK owners by surprise. If the company borrows, whether from a bank or on a director's loan account carrying interest, that interest has already reduced tested income once. Line 3c then reduces the deemed tangible income return by the same interest, so a leveraged UK company can find its shield eliminated even though it owns real property.

A worked Form 8992 example for a UK company owner

The following is an illustrative example constructed for this article. The figures are invented to show the mechanics and are not drawn from any client file.

Assume a US citizen resident in the UK owns 100 percent of a UK limited company operating a specialist consulting practice, with a 31 December year end, for a tax year beginning before 1 January 2026. After translating the accounts to US federal tax principles and removing the excluded categories, gross tested income is 900,000 US dollars and properly allocable deductions, including the owner's salary and employer national insurance, are 500,000 US dollars. Tested income on Schedule I-1, line 6 is therefore 400,000 US dollars. The company owns a fitted-out office suite, servers and equipment with an aggregate US adjusted basis under the alternative depreciation system averaging 240,000 US dollars across the four quarter ends. It has a small bank facility generating tested interest expense of 6,000 US dollars and tested interest income of 1,000 US dollars.

Schedule A column (e), pro rata share of tested income: 400,000 US dollars, because ownership is 100 percent.
Form 8992, Part I: net CFC tested income of 400,000 US dollars, with no tested loss to offset.
Part II, line 2, deemed tangible income return: 10 percent of 240,000, which is 24,000 US dollars.
Part II, line 3c, specified interest expense: 6,000 less 1,000, which is 5,000 US dollars.
Part II, line 4, net deemed tangible income return: 24,000 less 5,000, which is 19,000 US dollars.
Part II, line 5, the inclusion: 400,000 less 19,000, which is 381,000 US dollars reported on Schedule 1 (Form 1040), line 8o.

The shape of that result is the point. A company with a genuine 240,000 US dollar tangible asset base still sheltered under 5 percent of its tested income, and the leverage clawed back a fifth of even that. Now run the same company for a tax year beginning on 1 January 2026. The deemed tangible income return is repealed, the equivalents of Part II lines 2 to 4 fall away, and the inclusion is the full 400,000 US dollars. The 19,000 US dollar shield disappears for every US owner of a UK service company, however carefully the asset register was built.

What if one of your UK companies has a tested loss?

Founders frequently hold more than one UK company: a profitable trading entity and a second company carrying a development project, a property, or an early-stage venture. Form 8992 aggregates across all of them, which is generally helpful, because a tested loss in one company reduces net CFC tested income arising from another. Schedule A gives each company its own row and Part I nets the totals.

The trap sits in the QBAI columns. A tested loss controlled foreign corporation does not contribute QBAI to column (g). Instead, column (h) records a tested loss QBAI amount, being 10 percent of what its QBAI would have been had it been a tested income company. This is not a second shield. The asset-heavy company in a group is very often the loss-making one, so the intuitive expectation that the group's assets shelter the group's profit does not hold on the face of the form.

Net CFC tested income also cannot be negative, so an excess tested loss is not banked as a Form 8992 carryforward, and a loss year that fully absorbs a profitable sibling's tested income can waste relief.

What changed for tax years beginning after 31 December 2025?

The One Big Beautiful Bill Act, Public Law 119-21, rewrote section 951A for tax years of foreign corporations beginning after 31 December 2025. The statutory measure is no longer described as global intangible low-taxed income but as net CFC tested income, commonly abbreviated NCTI. The changes that matter to a US owner of a UK company are these:

The net deemed tangible income return is repealed. There is no longer a 10 percent return on qualified business asset investment carved out, so the entire net CFC tested income figure is included.
The section 250 deduction available against the inclusion is set at 40 percent, replacing the 50 percent that applied to GILTI for earlier years.
The resulting effective US rate on a corporate shareholder's inclusion, before foreign tax credits, is 12.6 percent, compared with 10.5 percent under the previous 50 percent deduction.
The section 960(d) haircut on deemed paid foreign taxes falls from 20 percent to 10 percent, so 90 percent of the associated foreign taxes are creditable rather than 80 percent.
Related changes to expense allocation for the section 904 limitation alter how much of that credit is usable in practice.
Section 958(b)(4) is restored and new section 951B is introduced, changing which foreign corporations are controlled foreign corporations in the first place.

For a UK owner-managed company the net effect is adverse on the inclusion side and helpful on the credit side. The improved credit position at 90 percent is the more meaningful change, because UK corporation tax at the 25 percent main rate is a substantial pool of foreign tax. Do not treat the Form 8992 filed for a 2024 or 2025 year as a template: check the current revision of the form and instructions before rolling anything forward, because the line structure supporting the repealed deemed tangible income return cannot survive unchanged.

Why a 31 March UK year end changes which rules apply to you

This is the point almost no general guide addresses, and it is squarely a UK problem. The effective date is expressed by reference to tax years of foreign corporations beginning after 31 December 2025. UK limited companies do not have to use a calendar accounting period, and a large proportion do not. A 31 March year end is the single most common choice, because it aligns with the UK corporation tax financial year, and 30 June, 30 September and 5 April year ends are all widespread.

Two US founders in the same commercial position, filing the same US tax year, can therefore be on opposite sides of the change:

A UK company with a 31 December year end has a period beginning 1 January 2026, which falls under the new rules. Its owner's first NCTI computation covers calendar 2026 and is reported on the 2026 Form 1040.
A UK company with a 31 March year end has a period running 1 April 2025 to 31 March 2026. That period began before 1 January 2026, so the previous rules apply to it in full, including the deemed tangible income return, even though it ends in 2026.
That same company's next period, 1 April 2026 to 31 March 2027, is its first under the new rules, and the resulting inclusion falls into the owner's 2027 US tax year.
So a founder with a 31 March UK company keeps computing QBAI and a deemed tangible income return for a period ending well into 2026, and does not touch the new regime on a US return until 2027.

In practice an asset register a founder might have been tempted to abandon, on the assumption that QBAI no longer matters, has to be maintained for one further period. And where a founder owns two UK companies with different year ends, a single Form 8992 can straddle the change, with one Schedule A row computed under the old rules and another under the new. That is a review point we build into every engagement with a non-calendar UK accounting date, and a mismatch that automated rollforwards handle badly.

Why Schedule A columns (k) and (l) matter more than they look

Columns (k) and (l) are completed after Parts I and II are finished, which invites preparers to treat them as a formality. Column (k) is the GILTI allocation ratio, computed by dividing each company's column (e) pro rata share of tested income by the total of column (e). Column (l) multiplies that ratio by the inclusion at Part II, line 5, pushing the aggregate inclusion back down and allocating it to each individual tested income controlled foreign corporation.

That allocation is what creates previously taxed earnings and profits at the level of each UK company. Once an amount has been included under section 951A and allocated to a specific company, the corresponding earnings sit in a previously taxed earnings and profits account tracked on Schedule J of Form 5471. When the UK company later pays a dividend out of those earnings, the distribution is not taxed a second time. The value of getting columns (k) and (l) right is felt years later, at the moment cash finally comes out of the company.

We see the failure constantly on catch-up engagements. A founder has several years of inclusions correctly computed, has paid US tax on profit never received, then extracts a dividend and pays tax again, because nobody maintained the previously taxed accounts on Schedule J.

How is the Form 8992 inclusion actually taxed?

An individual US shareholder who does nothing further reports the inclusion on Schedule 1 (Form 1040), line 8o and pays tax at ordinary graduated rates, with no section 250 deduction and no credit for the UK corporation tax the company paid, because that tax was borne by the company rather than the individual. This is the harshest outcome available and it is the default. It is why a US owner of a profitable UK company can face a US liability on income that has already borne UK corporation tax at 25 percent, with the two taxes failing to meet.

The election under section 962 is the mechanism that closes that gap. An individual electing under section 962, following Regulations sections 1.962-1 and 1.962-2, is taxed on the inclusion at corporate rates and is treated as a domestic corporation for the purpose of the deemed paid foreign tax credit under section 960, with a corresponding section 78 gross-up. The final regulations under section 250 confirm that an electing individual can also claim the section 250 deduction. Where the underlying UK corporation tax rate is high relative to the US corporate rate, this frequently reduces the current-year US liability on the inclusion substantially.

The election is not consequence-free and is not made once and forgotten. It is annual, made by statement with the return rather than on a dedicated form, and it changes the character of later distributions out of the electing shareholder's previously taxed accounts. Domestic corporations, by contrast, compute the section 250 deduction on Form 8993, which is not open to an individual who has not made the election.

Does a 25 percent UK corporation tax rate remove the problem?

Not by itself, and this is the most common misconception among UK-based founders. GOV.UK sets the UK main rate of corporation tax at 25 percent for profits above 250,000 pounds, with a small profits rate of 19 percent for profits at or below 50,000 pounds and Marginal Relief between the two, both thresholds proportionately reduced for short accounting periods and divided by the number of associated companies. A UK company paying at or near the main rate is by no stretch a low-taxed foreign company in commercial terms.

But the regime is mechanical, not purposive. Nothing in section 951A switches off because the foreign tax rate is respectable. There is a separate elective high-tax exclusion at Regulations section 1.951A-2(c)(7) which can remove high-taxed income from tested income altogether, and it is the right tool in many UK cases; we cover its conditions and its group-wide scope in a dedicated article. The compliance point here is that even where the high-tax exclusion or a section 962 election reduces the US liability to nil, the Form 5471, the Schedule I-1 and the Form 8992 are still prepared and filed. A zero-tax outcome is the result of correctly completed forms, not a reason to skip them.

Common Form 8992 errors we correct on review

Starting from the Companies House statutory accounts profit or the CT600 taxable total profits rather than rebuilding income and deductions under US federal tax principles.
Entering zero QBAI because the UK capital allowances pool is nil after the Annual Investment Allowance or full expensing, instead of computing US adjusted basis under the section 168(g) alternative depreciation system.
Using year-end tangible fixed assets rather than the average of adjusted bases at the close of each of the four quarters.
Omitting the specified interest expense reduction at Part II, lines 3a to 3c, and overstating the shield on a leveraged company.
Treating a tested loss company's assets as though they contribute QBAI in column (g) rather than a tested loss QBAI amount in column (h).
Failing to file at all in a tested loss year, on the assumption that a nil inclusion means nothing is due.
Leaving columns (k) and (l) blank, so no previously taxed earnings and profits are established for later distributions on Schedule J of Form 5471.
Rolling a prior-year computation forward into a period beginning after 31 December 2025 without removing the repealed deemed tangible income return.

What happens if Form 8992 was never filed?

The Instructions for Form 8992 cross-refer to the penalties under sections 6038(b) and 6038(c). Under the section 6038 regime as applied to foreign corporation information reporting, a penalty of 10,000 US dollars applies for each annual accounting period of each foreign corporation for which the required information is not furnished. If the failure continues more than 90 days after the IRS mails notice of it, an additional 10,000 US dollars applies for each 30-day period, subject to a maximum of 50,000 US dollars for each failure. Section 6038(c) separately provides for a reduction in foreign tax credits, a distinct and often overlooked consequence.

The compounding risk is more serious. A missing Form 8992 usually travels with a missing Form 5471, and a return that omits a required international information return can remain open to assessment beyond the ordinary limitation period. We rarely see Form 8992 missing in isolation; it is missing because the shareholder did not know the UK company was a controlled foreign corporation, in which case several years of Forms 5471, Schedules I-1, Forms 8992 and often FBARs filed with FinCEN are outstanding together, and are far better handled as a coherent submission than one form at a time.

How we prepare Form 8992 for UK company owners

Our preparation work runs in the order the statute does. We establish controlled foreign corporation status and pro rata shares from the share register and the section 958 attribution rules, including the post-2025 changes. We rebuild the UK company's income statement under US federal tax principles and translate it properly. We construct qualified business asset investment from an asset-by-asset register on the alternative depreciation system, quarter by quarter. We then complete Schedule I-1, Schedule A, Parts I and II, and finally columns (k) and (l), carrying the allocation through to the previously taxed earnings and profits accounts on Schedule J.

Form 8992 is a one-page form that depends entirely on the quality of the work behind it. For a US shareholder of a UK limited company, that work is the difference between a defensible filing position and a return that produces the right-looking number for the wrong reasons.