US–UK Cross-Border Business Tax: The Complete Guide
A practical guide to running a business across the US and UK: entity setup, the Delaware flip, corporation tax, permanent establishment and transfer pricing.
Which direction are you going?
Almost every cross-border business question starts with the direction of travel. The tax consequences of a US company opening in the UK are not the mirror image of a UK company expanding into the US.
Opening a UK presence
You will weigh a UK subsidiary against a branch, register with Companies House and HMRC, and consider UK corporation tax, VAT and PAYE payroll from day one. Whether your activity creates a UK permanent establishment is the pivotal question.
Expanding into the US
You will choose a state of incorporation, decide between a C-corp and an LLC, and confront federal corporate tax plus state income and sales tax. US "nexus" rules — not just physical presence — decide where you owe.
The eight decisions that shape your cross-border tax
Each of these is a service we handle end to end. Here is what each one means and why it matters.
Entity setup & structure
Subsidiary or branch? C-corp or LLC? The choice drives how profits are taxed, whether losses can be used, and how cash moves between the two sides. An LLC that looks simple in the US can be treated very differently by HMRC, creating mismatches if it is not planned for.
The Delaware flip
UK startups raising US venture capital are often asked to put a US parent — usually a Delaware C-corp — above the UK company. The "flip" has real tax consequences for founders and existing investors on both sides, and the timing relative to any UK tax reliefs matters a great deal.
Corporation tax, both sides
The UK main rate of corporation tax is 25%; the US federal corporate rate is 21%, before state taxes. The work is not the arithmetic — it is making sure the same profit is not taxed twice, using the US–UK treaty and foreign tax credits so relief lands on the correct side.
Permanent establishment (PE)
A PE is a taxable presence in a country created by your activity there — an office, a dependent agent, sometimes just people doing certain work. Trip the PE threshold unknowingly and you can owe tax and filings in a country you did not think you had entered. Getting this right is the heart of cross-border planning.
Transfer pricing
When your UK and US companies trade with each other — services, IP, loans, goods — the price must be one that unconnected parties would agree (the "arm's length" principle). Both HMRC and the IRS scrutinise this, and documentation is expected. We set defensible pricing and keep the paperwork both authorities want.
VAT & US sales tax
These are not the same tax and do not offset each other. The UK charges VAT; US states charge sales tax on their own rules, and economic-nexus thresholds can create sales-tax duties in states where you have no office at all. Selling in both markets means running two separate indirect-tax regimes correctly.
Payroll & employment taxes
Hiring on either side brings its own payroll system — UK PAYE and National Insurance, or US federal and state payroll taxes — plus the question of social-security coverage, which the US–UK Totalization Agreement can resolve so you do not pay into both systems for the same person.
R&D relief & incentives
Both countries reward research and development, but through very different mechanisms — the UK through its R&D relief regimes, the US through the federal R&D credit. A cross-border group can often claim on both sides for the right activities, provided the costs are tracked and allocated properly from the start.
From first question to filed returns
The same four steps whether you are a two-person startup or an established group.
Scope
We map your structure, activity and goals across both countries.
Fixed quote
A fixed price, agreed before any work starts. No hourly meter.
Structure & file
We set up or realign the structure and prepare both sides' filings in step.
Year-round cover
Deadlines on both sides tracked so nothing arrives unannounced.
Planning a move across the Atlantic?
Tell us where your business is going and we'll map the tax picture on both sides — with a fixed quote before any work begins.
This guide is general information about US–UK business taxation and is not tax advice. Figures and thresholds are subject to change. Speak to a qualified adviser about your specific circumstances before acting.
