Property Income and Overseas Entity Compliance for U.S. LLCs in the U.K.
U.S. Limited Liability Companies (LLCs) that own, let, or invest in U.K. property fall under specific U.K. tax and disclosure rules. HMRC typically classifies most LLCs as companies (opaque) for tax purposes, meaning profits belong to the LLC until distributed to members.
Even though the LLC is formed in the U.S., if it earns U.K. property income, it must register, file, and pay U.K. Corporation Tax on its profits. These requirements apply whether or not the LLC has a physical presence in the U.K., and regardless of whether profits are repatriated to the U.S.
This section explains how the U.K. taxes overseas property businesses and outlines your obligations under the Non-Resident Landlord Scheme (NRLS). It also highlights how related regimes—such as ATED (Annual Tax on Enveloped Dwellings), SDLT (Stamp Duty Land Tax), and the Register of Overseas Entities (ROE)—affect U.S. LLC property ownership.
Non-Resident Landlord Scheme (NRLS)
Under the Non-Resident Landlord Scheme (NRLS), U.K. letting agents must register with HMRC and deduct basic-rate tax from rent paid to overseas landlords, unless HMRC has approved payments without tax being withheld. If a tenant pays more than £100 per week directly to a landlord who lives abroad, the tenant must also deduct tax. The tax withheld is sent to HMRC every quarter along with the required forms and certificates.
These rules apply to any landlord — individual, company, partnership, or trust — whose usual place of abode is outside the U.K. and who receives rent from U.K. property. The scheme ensures overseas landlords meet their U.K. tax obligations even while living abroad.
Gross-payment Authorisation
Normally, letting agents (and in some cases tenants) must deduct U.K. tax from rent paid to landlords who live overseas. However, a non-resident landlord can apply to HMRC for gross-payment authorisation, which allows them to receive rental income without tax being deducted at source.
Instead, any tax due is settled later through the landlord’s annual U.K. tax return — either through Self Assessment (for individuals) or Corporation Tax (for companies).
To qualify for gross-payment authorisation, the landlord must:
- Their U.K. tax affairs must be fully up to date.
- They must not have any serious outstanding tax debts.
- They must confirm their intention to comply with U.K. tax obligations going forward.
If HMRC approves the application, authorisation is typically backdated to the start of the quarter in which the request was made — preventing unnecessary deductions during that time.
Corporation Tax for Non-Resident Landlords
Since April 2020, overseas companies that earn rental income from UK property — including most U.S. LLCs — are subject to UK Corporation Tax instead of Income Tax. This change brought non-resident landlords in line with UK companies for tax purposes.
If your U.S. LLC receives rental income from UK property, you must:
- Register for UK Corporation Tax within 3 months of starting to receive rent.
- File a Corporation Tax Return (CT600) every year with HMRC.
- Pay any tax due within 9 months and 1 day after the end of your accounting period.
Your LLC can also claim allowable expenses and losses in the same way as a UK company, reducing your taxable profits. These may include:
- Property management and letting agent fees
- Maintenance and repair costs
- Accountancy and compliance costs
- Mortgage interest (subject to UK restriction rules)
In simple terms: if your U.S. LLC earns rental income from UK property, it must be treated as a UK company for tax purposes — registered, filing annual returns, and paying Corporation Tax on its UK rental profits.
Deductible Expenses and Capital Allowances
When your U.S. LLC earns rental income from U.K. property, you can deduct certain expenses to reduce your taxable profits. HMRC only allows expenses that are “wholly and exclusively” for the rental business — meaning they must relate directly to managing or maintaining the property.
Common allowable deductions include:
- Repairs and maintenance (fixing, not improving, the property)
- Letting agent and property management fees
- Accountancy and compliance costs
- Mortgage interest (subject to U.K. restrictions)
- Other direct property management expenses
Capital Allowances
In addition to regular expenses, some spending on longer-term assets may qualify for capital allowances, giving you tax relief over time rather than all at once. These apply to specific types of plant and equipment used in the rental business.
Examples of qualifying assets include:
- Furniture in furnished rental properties
- Fixtures and fittings in shared or common areas (e.g., lighting, security systems)
- Heating and ventilation systems
- Plant and machinery used in the property business
However, not all property-related spending qualifies. Improvements to residential spaces, such as replacing kitchens or bathrooms, are often treated as capital enhancements — not repairs — and may not be deductible in the same way.
Stamp Duty Land Tax (SDLT) for U.S. LLCs Buying U.K. Property
When a U.S. Limited Liability Company purchases residential property in the U.K., it is required to pay Stamp Duty Land Tax (SDLT), just like any other buyer. SDLT is charged in progressive bands, so higher portions of the property price are taxed at higher rates.
Overseas companies typically pay the standard SDLT rates, which can reach up to 12% for properties in the higher price brackets. In addition, foreign buyers are generally subject to an extra 2% surcharge that applies to all non-U.K. residents. Where the purchase qualifies as an “additional property,” for example if the LLC already owns property, a further 3% surcharge is added. These combined charges often mean that corporate foreign purchasers pay higher SDLT than most individual homebuyers.
However, there are exceptions. If a U.S. LLC purchases six or more residential properties in a single transaction, it may qualify to use non-residential (commercial) SDLT rates instead. These rates are typically lower, and the non-resident and additional property surcharges do not usually apply, which can significantly reduce the overall tax cost on large-scale acquisitions.
Understanding which SDLT rules apply is crucial for structuring purchases efficiently. The correct classification can affect both the tax due on completion and the wider compliance obligations of the U.S. LLC under U.K. property tax law.
Annual Tax on Enveloped Dwellings (ATED)
The Annual Tax on Enveloped Dwellings (ATED) applies when a company, including a U.S. LLC, owns residential property in the U.K. valued at more than £500,000. This is an annual tax, calculated based on the property’s value, with higher-value properties paying more. For ATED purposes, property values must be reassessed every five years.
Certain reliefs are available. For example, companies renting out the property as a genuine business, property developers or traders, and charities or some public bodies may qualify. Even if no tax is due because you qualify for relief, an ATED return must still be submitted each year to claim it.
Register of Overseas Entities (ROE)
If a foreign company or U.S. LLC owns U.K. property, it must register with the Register of Overseas Entities at Companies House. This requirement is designed to disclose who ultimately owns and controls overseas companies that hold U.K. real estate.
When registering, the U.S. LLC must provide information on anyone owning or controlling more than 25% of the company, as well as any trusts or complex ownership structures behind the company. This information must be confirmed and updated every year.
Failure to register prevents the Land Registry from allowing the property to be sold, transferred, mortgaged, or leased. Non-compliance may also result in criminal penalties, so accurate and timely registration is essential.
Compliance and Appeals
Owning UK property through a U.S. LLC means you must follow several UK tax and reporting rules. Missing deadlines can lead to penalties, so here’s a friendly guide to each requirement:
NRLS quarterly tax payments
Due: 30 days after each quarter end (30 Jun, 30 Sep, 31 Dec, 31 Mar)
If tax is being withheld under the Non-Resident Landlord Scheme, letting agents or tenants must send that tax to HMRC every quarter.
NRLS annual return & certificates
Due: 5 July
Letting agents or tenants who withheld tax must file an annual summary and provide certificates to the landlord.
Corporation Tax return (CT600)
Due: 12 months after the accounting period ends
The LLC must file a Corporation Tax return each year. Tax must be paid earlier, within 9 months + 1 day after the period ends.
ATED return & payment
Due: 30 April each year
For companies owning UK residential property over £500,000, a return must be filed even if no tax is due because relief applies.
ROE annual update
Due: Annually
The Register of Overseas Entities must be updated each year to confirm the beneficial owners.
Appeals (e.g., NRLS refusal by HMRC)
Due: Within 90 days
If HMRC refuses gross-payment approval or raises assessments, appeals must be filed within 90 days.
Need More Help?
U.S. LLCs that own or let UK property are treated as companies for tax, meaning they must register for Corporation Tax, file annual returns, and pay tax on rental profits. NRLS withholding rules may apply unless HMRC approves gross payment. SDLT, ATED, and the Register of Overseas Entities also apply to overseas company property ownership. In short, U.S. LLCs face full UK reporting and tax obligations even though they are formed abroad. For expert help managing U.S. UK property tax and compliance, contact our international tax team.