Why a US LLC double-taxes UK residents
The US treats an LLC as transparent by default, so members pay US tax on profits as they arise, at federal rates of up to 37% plus any state tax. HMRC generally concludes the opposite: the profits belong to the LLC in the first instance, and a UK-resident member is taxed only when profits are distributed, as a foreign dividend at up to 39.35% in 2026/27. Because the two countries tax different events at different times with a different character, credit relief often cannot bridge the gap, and the Anson case does not reliably rescue you: HMRC treats it as fact-specific and keeps opaque treatment as the general rule. The full mechanics are in our guide to UK tax on a US LLC. HMRC's 2026 consultation proposes letting UK-resident individuals treat eligible LLCs as transparent, but it is prospective only, has no start date and is not law, so it is no reason to form an LLC while still UK resident.
When each structure wins
A UK Ltd wins while you are UK resident and during the transition: both countries see it as opaque, profits bear Corporation Tax at 19% to 25%, and extraction through salary and dividends carries no mismatch. It also degrades gracefully when you leave: you can keep it and run it from abroad, or close it with capital treatment, using the £25,000 strike-off rule or an MVL with Business Asset Disposal Relief at 18% for disposals from 6 April 2026. Once you are genuinely non-resident under the Statutory Residence Test, the UK generally has no claim on the LLC's non-UK profits, and what remains is a simple, flexible US structure with pass-through taxation and credibility with US clients and platforms.
Sequencing is everything
Form the LLC after your non-residence is established, not before: an LLC acquired while UK resident starts life inside the trap, and unwinding it later is messier than never entering it. Keep the LLC's management and control outside the UK, and be honest about return plans, because coming back within five years can trigger the temporary non-residence rules and put you straight back in the mismatch. An LLC always brings US filing obligations, such as Form 5472 for a foreign-owned single-member LLC; those are handled by our US partners (Enrolled Agents and CPAs), whom we coordinate for you, while Horizon advises on the UK side. Fees are fixed and agreed upfront, and a free clarity call is the right first step before you form anything.