Is my UK limited company a CFC if I own 100% of it?

Yes. A UK limited company more than 50% owned by US shareholders — US persons each holding at least 10% by vote or value — is a controlled foreign corporation, so a wholly owned Ltd is automatically a CFC. That triggers annual Form 5471 reporting and potential GILTI/NCTI inclusions on the company's profits, whether or not anything is distributed to you.

Do I pay US tax on profits I leave inside my UK Ltd?

Potentially, yes. GILTI — renamed net CFC tested income (NCTI) for tax years beginning after December 31, 2025 — taxes a US shareholder currently on the CFC's tested income even when profits are retained. Whether actual US tax results depends on the high-tax exception, a section 962 election, and foreign tax credits for the UK corporation tax the company paid.

Is GILTI gone in 2026 — what is NCTI?

GILTI was not repealed; it was renamed and recalibrated. For tax years beginning after December 31, 2025, the One, Big, Beautiful Bill Act renamed the inclusion net CFC tested income, eliminated the 10% deemed return on tangible assets (QBAI), cut the section 250 deduction from 50% to 40% (per the Instructions for Form 8993 on IRS.gov), and raised the deemed-paid foreign tax credit allowance from 80% to 90%. The inclusion base is broader, and the corporate-rate effective rate is 12.6% before credits.

Does paying 25% UK corporation tax mean I owe no GILTI?

Often, but not automatically. The high-tax exception excludes tested income taxed at an effective foreign rate of at least 18.9% — and the UK main rate of 25% usually clears it. But the test uses an effective rate computed under US tax principles, elected year by year. The 19% small profits rate clears the threshold by only 0.1 points, and UK reliefs such as full expensing or R&D relief can push a company's effective rate below 18.9% in a given year. The computation has to be run annually before the election is relied on.

What forms do I file for GILTI on a UK limited company, and what are the penalties?

The core forms are Form 5471 (Information Return of U.S. Persons With Respect To Certain Foreign Corporations) and Form 8992 (the GILTI/NCTI inclusion computation), plus Form 8993 if a section 962 election is made, alongside FBAR and Form 8938 where thresholds are met. Missing Forms 5471 draw penalties starting at 10,000 dollars per form per year, and an unfiled Form 5471 can keep the statute of limitations open on your entire return.

I never reported GILTI or filed Form 5471 — can I use the Streamlined procedures?

If your failures were non-willful and you meet the non-residency test — no US abode and at least 330 full days outside the US in one of the last three years — the Streamlined Foreign Offshore Procedures on IRS.gov let you file 3 years of amended returns with the missed Forms 5471 and 8992, 6 years of FBARs, and a Form 14653 certification, paying tax and interest but with relief from failure-to-file, accuracy-related, information-return, and FBAR penalties. If no tax was actually due, the delinquent international information return procedures with a reasonable cause statement may fit better.

GILTI UK Limited Company: US Owner's 2026 Guide

The GILTI UK limited company problem is simple to state and expensive to ignore: if you are a US person who owns a UK Ltd that qualifies as a controlled foreign corporation, the IRS can tax you personally on the company's profits every year, even if you never take a penny out. The rules changed materially for tax years beginning after December 31, 2025 — the regime long known as GILTI now operates under the name net CFC tested income, or NCTI, following the One, Big, Beautiful Bill Act of 2025 — but the core exposure for US owners of UK companies has not gone away. In several respects it has broadened.

This guide is the practical, current-law walkthrough for US investors and business owners who hold shares in a UK limited company: when your company is caught, how the inclusion is actually computed, what rate you will really pay, how the high-tax exception interacts with UK corporation tax, which forms the IRS expects, and how to repair past years where the income was never reported. Every figure here is verified against IRS.gov and GOV.UK sources; where the law is still settling, we say so.

What Is GILTI, and What Is NCTI?

GILTI — global intangible low-taxed income — is the regime under section 951A of the US tax code that requires a US shareholder of a controlled foreign corporation to include the company's active earnings in their own US taxable income each year, whether or not those earnings are distributed. It was enacted in 2017 to stop US taxpayers deferring tax through foreign companies, and despite the word intangible in the name, it has always applied to ordinary trading profits — consultancy fees, agency margins, e-commerce income — earned through a UK Ltd.

NCTI — net CFC tested income — is the renamed and recalibrated version of the same regime that applies for tax years beginning after December 31, 2025. The One, Big, Beautiful Bill Act (P.L. 119-21, signed July 4, 2025) struck the deduction for a deemed 10% return on tangible assets (the QBAI exemption), so the inclusion now equals the CFC's full net tested income rather than only the excess over a tangible-asset return. IRS materials on the 2025 law now refer to net CFC tested income under sections 951(a) and 951A(a), and the Instructions for Form 8993 on IRS.gov confirm the accompanying rate change: the section 250 deduction that reduces the inclusion for corporate-rate taxpayers fell from 50% to 40% for tax years beginning on or after January 1, 2026. In short: the acronym changed, the base got wider, and the headline rate went up.

GILTI UK Limited Company Basics: When Is Your Ltd a CFC?

A controlled foreign corporation is a foreign company in which US shareholders together own more than 50% of the shares by vote or value, and a US shareholder is a US person — citizen, green card holder, or US tax resident — who owns at least 10% of the vote or value, directly, indirectly, or by attribution from related persons. A UK limited company is a foreign corporation in the eyes of the IRS by default, so the analysis is purely about who owns it. In practice, the most common fact patterns among our clients resolve quickly:

A US citizen in London owning 100% of their personal services Ltd: the company is a CFC, and every pound of retained profit is potentially within the inclusion rules.
A US entrepreneur owning 60% alongside a British co-founder owning 40%: still a CFC, because a single 10%-plus US shareholder holds more than half.
Two unrelated US investors owning 30% each with UK investors holding the rest: a CFC, because US 10% shareholders collectively exceed 50%, and both Americans have inclusions.
A US person owning 8% with no related-party attribution: not a US shareholder, no inclusion — but watch attribution from a spouse, parent, or a partnership you hold an interest in.
A US green card holder living in Manchester who owns 45% while their US-citizen spouse owns 10%: attribution rules can aggregate family ownership, and both the CFC test and the shareholder test must be re-run with constructive ownership counted.

Note that CFC status is tested on any day of the year, and the inclusion falls on those who are US shareholders on the last day the company is a CFC. Selling shares mid-year, gifting them to a non-US spouse, or restructuring does not automatically switch the rules off, and can create separate reporting events of its own.

How Is Tested Income Computed for a UK Ltd?

Tested income is the CFC's gross income for the year, computed under US tax principles, minus certain excluded categories and minus deductions properly allocable to the remaining income. This is a genuinely separate computation from the company's UK accounts: the starting point is the UK Ltd's profit, but it must be re-derived using US methods — US depreciation lives, US revenue recognition, US treatment of provisions and reserves — and translated at appropriate exchange rates. The excluded categories matter, because income that falls into them is dealt with elsewhere rather than escaping tax:

Subpart F income — broadly passive income such as interest, most dividends, rents, and royalties, plus certain related-party sales and services income — which is included in the US shareholder's income under a parallel, older regime.
Income effectively connected with a US trade or business, which the company itself pays US tax on.
Income excluded under the high-tax exception, where a valid election is in place (covered below).
Certain foreign oil and gas extraction income, rarely relevant to a UK trading Ltd.

What remains — for a typical UK trading company, essentially all of its operating profit — is tested income. Under pre-2026 GILTI, the shareholder then deducted a net deemed tangible income return equal to 10% of the company's qualified business asset investment (QBAI), its adjusted basis in depreciable tangible property. For tax years beginning after December 31, 2025, that deduction is gone. A UK company holding significant plant, equipment, or trading premises loses the shield entirely: the inclusion is now the full net tested income. Asset-light service companies see little computational change from this particular amendment, but asset-heavy businesses can see their US inclusion rise sharply between their 2025 and 2026 filings even with identical commercial results. And because the change applies to tax years of the CFC beginning after December 31, 2025, a UK Ltd with a non-calendar accounting period can have one company year still under GILTI rules and the next under NCTI — the transition needs to be tracked, not assumed.

What Rate Will You Actually Pay in 2026?

The answer depends almost entirely on whether you do nothing, elect under section 962, or qualify for the high-tax exception. An individual US shareholder who does nothing includes their share of the company's tested income in ordinary income, taxed at rates up to 37%, with no section 250 deduction and — critically — no credit for the UK corporation tax the company paid, because the deemed-paid foreign tax credit belongs to corporate taxpayers. That is the worst outcome in the system: UK corporation tax at up to 25%, then US personal tax on the same profit, with the two systems refusing to talk to each other.

A section 962 election lets an individual be taxed on the inclusion as if a US corporation had received it. That unlocks the 21% corporate rate, the section 250 deduction — now 40%, per the Instructions for Form 8993 on IRS.gov — and the deemed-paid credit for UK corporation tax. The arithmetic for 2026: 21% multiplied by the 60% of the inclusion that survives the deduction gives a 12.6% effective US rate before credits. The 2025 law also raised the deemed-paid credit allowance from 80% to 90% of foreign taxes attributable to the inclusion, which lowers the break-even point: a foreign effective rate of roughly 14% (12.6% divided by 0.9) is now generally enough for credits to eliminate the residual US tax for a corporate-rate taxpayer. Since UK corporation tax runs at 19% to 25%, a section 962 electing owner of a profitable UK Ltd will usually find the current-year US charge on the inclusion credited away — though the election brings its own complexity, including a second layer of US tax when the company actually distributes the previously taxed profits beyond the amount of US tax paid under the election.

Does the High-Tax Exception Save UK Company Owners?

The high-tax exception allows tested income to be excluded from the inclusion entirely where the CFC's income was subject to foreign tax at an effective rate of at least 90% of the US corporate rate — 18.9% at the current 21% rate. GOV.UK confirms the UK corporation tax main rate is 25% for profits above 250,000 pounds, with a 19% small profits rate at or below 50,000 pounds and marginal relief tapering between the two. On headline rates, most profitable UK companies clear 18.9% comfortably, and for many US owners of UK Ltds the annual high-tax election — made on the US return, consistently for all commonly controlled CFCs — is the cleanest way to switch the inclusion off.

But the test is not the headline rate. The effective rate is measured against the tested unit's income recomputed under US tax principles, and that is where UK companies get caught. A company paying the 19% small profits rate clears the 18.9% threshold by a tenth of a percentage point — no margin at all. UK reliefs that reduce the corporation tax actually paid — full expensing of qualifying plant and machinery, R&D relief, brought-forward losses, patent box benefits — can pull the effective rate on current-year income below 18.9% even while the headline rate looks safe. Timing differences cut both ways: a deduction accelerated for UK purposes but spread for US purposes changes both sides of the fraction. The high-tax exception is a year-by-year computation, not a permanent status, and a company that qualified in one year can fail the next after a capital investment program or an R&D claim. This is precisely the kind of computation that should be run before the election is relied on, not after the IRS asks.

How Does GILTI Interact With UK Corporation Tax?

The two systems operate independently and neither yields to the other. Your UK Ltd pays corporation tax to HMRC on its profits under UK rules — 19% to 25% depending on the profit band, per GOV.UK. The US then runs its own computation on the same underlying profit and charges the shareholder personally. The US-UK income tax treaty does not switch off the inclusion: the saving clause preserves the United States' right to tax its citizens and residents as if the treaty did not exist for most purposes. Relief comes only through the mechanics described above — the deemed-paid credit via section 962, or the high-tax exception — plus one piece of good news on the back end: profits that have already been included in your US income become previously taxed earnings and profits, which generally are not taxed a second time by the US when eventually distributed as dividends, though basis, currency, and UK dividend taxation all still need to be tracked at that point.

A Worked Scenario: A Manchester Founder With a Profitable Ltd

Take an illustrative US entrepreneur in Manchester who owns 100% of a UK software consultancy trading as a limited company. The company earns 400,000 pounds of profit in its accounting year, holds negligible fixed assets, and retains most of its earnings to fund growth. The company is unambiguously a CFC, and she is a 100% US shareholder. The company pays UK corporation tax at the 25% main rate — 100,000 pounds — since profits exceed the 250,000 pound threshold on GOV.UK's published bands. Her US options, in order of typical attractiveness: first, the high-tax exception — with a US-principles effective rate near 25%, comfortably above 18.9%, an annual election excludes the tested income entirely, and her US return reports the position through Form 5471 and the election statements with no current inclusion. Second, if in some year the effective rate falls below the threshold — say a large full-expensing claim drops it to 17% — the exception fails, and a section 962 election becomes the backstop: a 12.6% pre-credit US rate on the inclusion, against which 90% of the allocable UK corporation tax is credited, typically reducing the residual US bill to nil or near it. Third, doing nothing would put roughly the full 400,000 pounds (converted to dollars) into her ordinary income at up to 37% with no credit for the company's UK tax — the outcome the other two routes exist to avoid. The numbers are illustrative, but the decision tree is exactly the one every US owner of a profitable UK Ltd walks through annually.

What Are the Filing Requirements? Form 8992 and Form 5471

The computation lives on two forms, filed with your individual return. Form 8992 — titled U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI) on IRS.gov, with revisions following the statutory rename — is where net CFC tested income is aggregated across your CFCs and the inclusion is computed. Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, is the information return that reports the company itself: income statement and balance sheet translated to US principles, earnings and profits, related-party transactions, and the schedules that feed the tested income numbers. A section 962 electing shareholder also engages Form 8993 for the section 250 deduction. The annual workflow for a US owner of a UK Ltd, in the order the work actually has to happen:

Close the UK statutory accounts and corporation tax computation for the company's accounting period.
Rebuild the profit under US tax principles and translate it — this produces tested income, earnings and profits, and the foreign taxes attributable to the inclusion.
Run the elections analysis: high-tax exception effective-rate test first, section 962 modelling if the exception fails or is inefficient.
Prepare Form 5471 with the required schedules for your filing category, Form 8992 for the inclusion, and Form 8993 if section 962 applies.
File with the Form 1040, alongside FBAR (FinCEN Form 114) for the company signatories' reportable accounts and Form 8938 where thresholds are met.

The penalties make casual non-compliance expensive: missing or substantially incomplete Forms 5471 draw penalties starting at 10,000 dollars per form per year under section 6038, with continuation penalties if not cured after IRS notice, and an incomplete Form 5471 can also hold the statute of limitations open on the entire return.

What If You Never Reported GILTI for Your UK Company?

This is one of the most common situations we prepare filings for: a US person has run a UK Ltd for years, filed dutifully with HMRC and Companies House, and only later learns that the IRS expected Forms 5471 and 8992 and an annual inclusion. The primary repair route is the Streamlined Foreign Offshore Procedures. Per IRS.gov, an eligible taxpayer files the most recent 3 years of delinquent or amended returns with all required information returns — including the missed Forms 5471 and 8992 — plus 6 years of FBARs, together with a Form 14653 certification explaining that the failures were non-willful: the product of negligence, inadvertence, mistake, or a good-faith misunderstanding of the law. The non-residency test for citizens and green card holders requires no US abode and at least 330 full days physically outside the United States in at least one of the three years. A taxpayer who completes the streamlined foreign package pays the tax and statutory interest due but receives relief from failure-to-file, failure-to-pay, accuracy-related, information-return, and FBAR penalties. Where the missed forms produced no unreported tax — for instance, because the high-tax exception would have eliminated every year's inclusion — the delinquent international information return submission procedures, filing the late Forms 5471 with a reasonable cause statement, can be the better-fitting route. Which door you walk through, and how the non-willfulness narrative is drafted, determines whether the past is closed cleanly; this is preparation work that rewards precision, and it is exactly the work our firm does daily for US owners of UK companies.

What Should UK Company Owners Do Before the Next Filing Season?

Three things. First, confirm your CFC status and filing category now, not in March — attribution surprises are cheaper to find early. Second, have the 2026 transition modelled: the loss of the QBAI shield, the 40% section 250 deduction, and the 90% credit allowance change the answer to the elect-or-exclude question for many UK companies, and a high-tax election that was obviously right under GILTI deserves a fresh effective-rate computation under NCTI. Third, if there are unfiled years behind you, deal with them through the proper procedures before the IRS raises them — the penalty relief on offer is only available to those who come forward first. We are US-UK cross-border tax preparation and compliance specialists: we build the tested income computations, prepare Forms 5471, 8992, and 8993, run the election analyses, and take clients through the streamlined procedures from first computation to filed return.