UK to US: preparing for cross-border tax and compliance

“Attempting to start business in the US as a UK-based business is like entering multiple jurisdictions all at the same time.”

This client observation captures the complexity of entering the US market well. Unlike the UK, the US operates a dual system of taxation, with differing rules at federal and state levels and further variation from state to state. While the UK–US double tax treaty can help reduce certain burdens, many US states do not adhere to it. As a result, businesses often face a complex mix of registration requirements, including separate registrations in multiple States.

UK to US tax considerations

Before expanding into the US, UK businesses should carefully assess the following:

• Will your activities in the US create a taxable presence? Even if the double tax treaty suggests not, should protective filings be considered to safeguard against potential challenges from US authorities?
• If a taxable presence is established, is it more appropriate to operate as a branch or to set up as a new US entity?
• Will you be engaging with US customers?
• Are tariffs applicable?
• Do you need to collect sales tax?
• Will there be US employees and will you have US payroll obligations?

Navigating these issues requires careful planning and expert guidance to ensure compliance and optimise your structure for long-term success.

Managing cross-border tax implications

Expanding into the US can affect your UK business’s UK corporation tax position. Depending on the structure and nature of your activities, this may result in a higher effective tax rate or bring the business within audit thresholds. There are various ways to claim double tax relief, including credit, deduction or branch profits exemption. Ensuring the correct forms are submitted to US payors and the IRS is an important part of managing cross-border compliance.

Personal tax considerations for UK to US relocations

Individuals relocating to the US, whether on a temporary or permanent basis, may face complex personal tax considerations. These include how residency is determined in each jurisdiction, the treatment of secondments, and the availability of double tax relief. In some cases, it may be possible to be considered resident in one country and non-resident in another, even when both domestic definitions of residency are met.

Our Moore Global US connections

Through Moore Global, we work alongside member firms across the US, giving us access to local insight and specialist knowledge when needed. These relationships allow us to collaborate on more complex or multi-state matters ensuring clients benefit from both continuity and cross-border expertise.

How Moore Kingston Smith can help

Entering the US market involves a range of tax and regulatory considerations. Our dual-qualified US/UK advisors are well placed to guide you through the process, ensuring your structure is fit for purpose.

We can help with:

• Corporate compliance in the US and UK;
• Double tax relief and claiming relevant credits or deductions;
• Consideration of branch profit exemption elections;
• Pre-entry planning and structuring;
• Preventing tax withholding and filing the correct forms with US payors and the IRS.

For individuals relocating to the US, whether temporary or permanently, we offer joined-up advice and compliance across UK and US personal matters. We ensure your residency status is correctly assessed, and relief is claimed, even where both jurisdictions’ rules apply.

Get in touch to explore how we can support your UK to US expansion.

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