HMRC Reporting for UK Founders with a US Delaware C-Corp (2026)
Your complete guide to UK tax reporting obligations when you own and operate a US company — SA100, SA106, CT600, National Insurance, equity reporting, and the deadlines that matter.
Your HMRC Obligations as a UK Founder with a US Company
Self-Assessment Return
Foreign Income Page
Online Filing Deadline
UK Tax Year
If you are a UK tax resident who owns, directs, or receives income from a US Delaware C-Corp, HMRC needs to know about it. The UK taxes its residents on worldwide income, which means every dollar of salary, every dividend, and every capital gain from your US company must be reported — even if you have already paid US tax on that income.
The good news: the UK-US Double Taxation Treaty ensures you do not pay tax twice. But you must affirmatively claim relief on the correct forms. HMRC will not automatically know that you paid US tax. If you fail to report foreign income, HMRC can impose penalties of up to 200% of the unpaid tax for offshore non-compliance — among the harshest penalties in the UK tax system.
Offshore penalties are severe. Since 2016, HMRC has applied enhanced penalties for undeclared offshore income. The standard penalty range for deliberate non-disclosure of US income is 100-200% of the unpaid tax. Even for careless errors, penalties start at 30%. Register for self-assessment and report your foreign income proactively.
What You Must Report
- US salary/employment income from C-Corp
- Dividends received from C-Corp
- Interest from US bank accounts
- Capital gains on US shares/assets
- Director fees (if applicable)
- Stock option exercises and equity gains
Forms You May Need
- SA100 — Main self-assessment return
- SA106 — Foreign income supplementary page
- SA108 — Capital gains supplementary page
- CT600 — Corporation tax (if UK Ltd exists)
- CF83 — Certificate of Coverage application
- ERS return — Employment-related securities
Self-Assessment Tax Return (SA100)
Registering for Self-Assessment
If you have foreign income from a US company, you must register for self-assessment with HMRC. Many UK employees who are taxed entirely through PAYE have never filed a self-assessment return. As a US company founder, that changes.
When to register:
- By 5 October following the end of the tax year in which you first received foreign income. For example, if you incorporated your C-Corp in January 2026 and started receiving salary, you must register by 5 October 2026.
- If you are already registered for self-assessment (e.g., as a sole trader or landlord), you do not need to register again — but you do need to add the SA106 supplementary page to your return.
How to register:
- Go to gov.uk/register-for-self-assessment. Select "You're not self-employed" (unless you also have sole trader income).
- You will need your National Insurance number, a Government Gateway ID (or create one), and details of your foreign income source.
- HMRC will issue you a Unique Taxpayer Reference (UTR) by post within 10 working days. You need this UTR to file your return and for W-8BEN forms.
- Once registered, you can file online via the HMRC portal or through commercial software (e.g., TaxCalc, Xero Tax).
Filing Deadlines
The UK tax year runs from 6 April to 5 April (unlike the US calendar year of 1 January to 31 December). This creates an important overlap that affects how you report and claim credits.
| Method | Deadline | Notes |
|---|---|---|
| Paper return (SA100) | 31 October | Following the end of the tax year (e.g., 31 Oct 2026 for 2025/26 tax year) |
| Online return (SA100) | 31 January | Following the end of the tax year (e.g., 31 Jan 2027 for 2025/26 tax year) |
| Tax payment deadline | 31 January | Any tax owed must be paid by this date; interest accrues from 1 February |
| Payment on account (1st) | 31 January | 50% of prior year's liability as advance payment for current year |
| Payment on account (2nd) | 31 July | Second 50% advance payment; balancing payment due following 31 January |
Late filing penalties: Miss the 31 January deadline by even one day and you face an automatic £100 penalty. After 3 months, daily penalties of £10/day apply (up to 90 days = £900). After 6 months, a further penalty of 5% of tax owed (minimum £300). After 12 months, a further 5% (or higher for deliberate withholding). These penalties apply even if you owe no tax.
The Tax Year Mismatch Problem
The single most confusing aspect of dual UK-US tax compliance is the misaligned tax years:
US Tax Year
- 1 January – 31 December (calendar year)
- C-Corp Form 1120 due: 15 April
- Personal 1040-NR due: 15 April (15 June if abroad)
- Extensions available to 15 October
UK Tax Year
- 6 April – 5 April (straddles two calendar years)
- SA100 online due: 31 January
- Income in UK 2025/26 = 6 Apr 2025 – 5 Apr 2026
- This spans parts of two US tax years
Example: Your UK 2025/26 tax return covers income from 6 April 2025 to 5 April 2026. This includes income from US tax year 2025 (April to December) and US tax year 2026 (January to April 5). When claiming Foreign Tax Credit on SA106, you need to apportion US taxes across the two periods.
Recommended approach: File your US taxes first (they are due 15 April, covering the previous calendar year). By the time your UK return is due (31 January), you will have actual US tax figures for at least one of the two US years that overlap with your UK tax year. For the partial year still outstanding, use an estimate and amend if needed. Most UK/US accountants follow this approach.
SA106 — Foreign Income Supplementary Page
The SA106 is the supplementary page of your self-assessment return where you declare all foreign income and claim Double Taxation Relief. This is the most critical form for UK founders with US companies.
Section 1: Double Taxation Relief
This section is where you claim credit for US tax already paid on income that is also taxable in the UK.
- Tick "Yes" to the question "Are you claiming Foreign Tax Credit Relief (FTCR)?" This activates the double taxation relief calculation.
- Enter the country: United States of America.
- For each type of income (employment, dividends, interest), enter the amount of foreign tax paid in GBP. Convert USD amounts using HMRC's published exchange rates for the relevant tax year.
- HMRC will calculate the maximum credit allowed (capped at the UK tax attributable to that foreign income). The credit reduces your UK tax bill pound for pound, up to that cap.
Which US taxes qualify for FTCR? Federal income tax, state income tax, and Alternative Minimum Tax (AMT) all qualify. US payroll taxes (FICA) do not qualify as "income tax" for FTCR purposes — but they may be avoided entirely through the Totalization Agreement (see National Insurance section below). The 15% US withholding tax on dividends qualifies for FTCR.
Section 2: Employment Income from Abroad
If you pay yourself a salary from your Delaware C-Corp, report it here.
What to enter:
- Box 1: Name of employer — your Delaware C-Corp name (e.g., "Acme Inc.")
- Box 2: Country — United States
- Box 3: Amount of foreign employment income — enter the gross salary in GBP (before any US tax deductions). Convert using HMRC's average exchange rate for the tax year, or the spot rate on each pay date if paid irregularly.
- Box 4: Foreign tax deducted — enter US federal income tax withheld on salary (from your W-2 or payroll records), converted to GBP.
- If you also had US state tax withheld, include it in the foreign tax amount.
Common pitfalls:
- Do not report C-Corp profits as personal income. The C-Corp is a separate legal entity. Its profits are not your income until distributed as salary or dividends. This is different from a sole trader or UK LLP where profits flow through to you.
- Report gross, not net. Many founders report their net-of-tax salary. HMRC requires the gross (pre-tax) amount. The US tax withheld goes in a separate box and is claimed as FTCR.
- US self-employment tax is not the same as salary tax. If you somehow received 1099 income (independent contractor) from your C-Corp rather than W-2 salary, this goes in a different section. But generally, founder compensation from a C-Corp should be W-2 salary.
Section 4: Foreign Dividends
If your C-Corp distributed dividends to you, report them in this section.
What to enter:
- Report the gross dividend amount — the amount before US withholding tax was deducted. If you received $8,500 net and $1,500 was withheld (15%), report the full $10,000 converted to GBP.
- Enter US withholding tax paid on the dividend in the foreign tax box.
- The dividend is then subject to UK dividend tax rates:
- 0% on first £500 (2025/26 dividend allowance — reduced from £1,000 in 2023/24)
- 8.75% — basic rate band
- 33.75% — higher rate band (£50,271–£125,140)
- 39.35% — additional rate band (above £125,140)
- The FTCR for the US withholding tax reduces your UK dividend tax liability, but cannot exceed the UK tax on that dividend income.
Double taxation on dividends is real. The C-Corp already paid 21% US corporate tax on the profits before distributing them. Then the US withheld 15% on the dividend itself. Then the UK taxes the dividend at up to 39.35% (with credit only for the 15% withholding, not the 21% corporate tax). The combined effective tax rate on dividends can exceed 55%. This is why most advisers recommend salary over dividends for UK founders. See our Tax Treaty salary vs. dividends analysis.
Currency Conversion: HMRC Exchange Rates
All amounts on your SA106 must be reported in GBP. HMRC requires you to use their official published exchange rates, not commercial rates from Google, XE, or your bank.
Where to find HMRC exchange rates:
- gov.uk/government/collections/exchange-rates-for-customs-and-vat — HMRC monthly exchange rates
- For self-assessment purposes, you can use either the average rate for the tax year or the spot rate on the date of each transaction. Using the average rate is simpler; using spot rates may be more favourable depending on currency movements.
- Whichever method you choose, apply it consistently across all transactions in the tax year.
Example: If the HMRC average GBP/USD rate for 2025/26 is 1.27, a $120,000 salary converts to approximately £94,488. If the US federal tax withheld was $25,000, that converts to approximately £19,685. You report £94,488 as the gross income and £19,685 as the foreign tax credit claim.
CT600 — If UK Ltd Is Parent Company
Many UK founders maintain a UK Limited company as the parent holding company of their Delaware C-Corp. If this applies to you, the UK Ltd has its own corporation tax obligations.
UK Ltd Corporation Tax Return (CT600)
A UK Ltd is subject to UK corporation tax on its worldwide profits, including income from foreign subsidiaries. If your UK Ltd owns the Delaware C-Corp, the CT600 return must account for:
- Dividends received from the US C-Corp: In most cases, dividends received by a UK company from a foreign subsidiary are exempt from UK corporation tax under the dividend exemption rules (Part 9A, CTA 2009). This exemption applies automatically if the dividend falls within one of the exempt classes (e.g., dividends from a controlled company or dividends in respect of non-redeemable ordinary shares). Most founder-held C-Corp structures qualify.
- Management charges or service fees: If the UK Ltd charges the C-Corp for management services, this income is taxable in the UK at the corporation tax rate (currently 25% for profits over £250,000; 19% for profits under £50,000; marginal rate between).
- Interest income: If the UK Ltd made a loan to the C-Corp and receives interest, this is UK-taxable. Claim FTCR for any US withholding (0% under the treaty for interest).
Controlled Foreign Company (CFC) Rules
The UK's Controlled Foreign Company (CFC) rules (Part 9A, TIOPA 2010) are designed to prevent UK companies from diverting profits to low-tax jurisdictions. If your UK Ltd "controls" the Delaware C-Corp (which it does, if it owns 50%+ of the shares), the CFC provisions potentially apply.
How CFC rules work:
If the US C-Corp is a CFC, HMRC can attribute a "CFC charge" to the UK Ltd — effectively taxing the C-Corp's profits in the UK, even if those profits have not been distributed. However, several exemptions exist that prevent the charge from applying in most legitimate cases:
Excluded Territories Exemption
- The US is on the "excluded territories" list
- Applies if the C-Corp's effective tax rate is > 75% of the UK rate
- UK corp tax rate: 25%; 75% threshold: 18.75%
- US federal rate: 21% — exceeds 18.75%
- Result: exemption usually applies
Other Key Exemptions
- Low Profits Exemption: CFC profits under £500,000
- Low Profit Margin Exemption: profit margin under 10%
- Tax Exemption: CFC pays tax of 75%+ of UK equivalent
- Exempt Period Exemption: first 12 months of control
In practice: Most UK founders with a Delaware C-Corp will qualify for the Excluded Territories Exemption. The US federal corporate tax rate of 21% is 84% of the UK 25% rate, comfortably exceeding the 75% threshold. However, if your C-Corp has significant state-level tax benefits (e.g., operating in a no-income-tax state with below-normal effective rate) or uses substantial R&D credits to reduce its effective rate below 18.75%, the exemption may not apply. Document your C-Corp's effective tax rate each year to support the exemption claim.
When CFC rules bite:
- If the C-Corp has artificially low profits (e.g., through excessive management charges to a third-country entity), HMRC may challenge the exemption.
- If the C-Corp has profits from intellectual property that was originally developed in the UK, the "IP chapter" of the CFC rules may apply regardless of the excluded territories exemption.
- If the C-Corp has "finance profits" (interest income, investment income) rather than trading income, additional CFC gateways may apply.
Double Taxation Relief on CT600
If the UK Ltd has any income from the US that is taxable in both countries (e.g., management fees subject to US withholding), claim Double Taxation Relief on the CT600:
- Complete the supplementary page CT600H (Double Taxation Relief)
- Enter the country (United States), the type of income, and the amount of US tax paid
- The relief is calculated as the lower of: the US tax paid, or the UK tax attributable to that income
- For dividends exempt under Part 9A, no DTR is needed (the income is not taxable in the UK at all)
National Insurance Implications
Class 1 NI vs Class 2 NI — Which Applies?
National Insurance contributions depend on the nature of your engagement with the US C-Corp:
| NI Class | When It Applies | Rate (2025/26) | Your Situation |
|---|---|---|---|
| Class 1 (employee) | Employment through UK payroll | 8% employee + 13.8% employer (on earnings above £12,570) | Applies only if C-Corp runs UK payroll or if you have a UK employer |
| Class 2 (self-employed) | Self-employment (sole trader / partnership) | £3.45/week (flat) | Does NOT apply if your only income is C-Corp salary (that is employment, not self-employment) |
| Class 4 (self-employed) | Self-employment profits above threshold | 6% on £12,570-£50,270; 2% above | Same as Class 2 — only applies if you are self-employed |
| Voluntary Class 3 | Filling gaps in NI record | £17.45/week | May be relevant if you have years with no UK NI contributions |
The common scenario for UK founders:
You are employed by a US C-Corp but working from the UK. You are not on UK payroll (no UK PAYE). You are not self-employed. Where does this leave you for NI purposes?
- If the C-Corp does not have a UK payroll or UK employer presence, there is no mechanism for Class 1 NI to be collected. You are not "employed" in the UK in the PAYE sense.
- However, HMRC may argue that if you are performing all your work from the UK for a foreign employer, you have a UK NI liability. This is an evolving area.
- The safest approach: apply for a Certificate of Coverage under the UK-US Totalization Agreement (see below). This formally establishes which country's social security system you belong to.
UK-US Social Security Totalization Agreement
The UK-US Totalization Agreement (separate from the income tax treaty) prevents you from paying social security contributions in both countries simultaneously. For UK founders, this is crucial because US FICA (Social Security + Medicare) totals 15.3% of salary — a significant cost.
How it works:
- General rule: You pay social security contributions only in the country where you work. If you work in the UK (even for a US employer), you pay UK NI, not US FICA.
- Detached worker exception: If you are "temporarily" sent to the other country (up to 5 years), you can remain in your home country's system. A UK founder temporarily working in the US can remain in the UK NI system for up to 5 years.
- Self-employed: If you are classified as self-employed for social security purposes, you pay contributions only in the country of residence.
Certificate of Coverage (Form CF83):
To prove your exemption from US FICA to the IRS or your C-Corp's payroll provider, obtain a Certificate of Coverage from HMRC:
- Download and complete form CF83 ("Application for a Certificate of Continuing Liability to UK National Insurance contributions") from the HMRC website.
- Post it to: HMRC National Insurance Contributions Office, International Caseworker, Benton Park View, Newcastle upon Tyne, NE98 1ZZ.
- HMRC will issue a certificate (usually within 4-8 weeks) confirming you remain subject to UK NI. This certificate is the equivalent of the US "Certificate of Coverage" under the Totalization Agreement.
- Provide a copy to your C-Corp (as employer) and retain it for your records. The C-Corp can then exclude you from FICA withholding.
Potential savings: On a $100,000 salary, US FICA totals $15,300 ($7,650 employee share + $7,650 employer share). If you remain in the UK NI system instead, the UK NI cost is typically lower (especially if the C-Corp does not operate UK payroll and you pay voluntary NI or Class 2 as appropriate). This can save $10,000+ per year depending on the exact comparison.
Reporting US Stock and Equity to HMRC
Employment-Related Securities (ERS)
If you received shares, stock options, or other equity in your Delaware C-Corp by reason of your employment or office, the UK has specific tax rules under Part 7, Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).
Key rules for founder stock:
- Securities acquired for less than market value: If you acquired C-Corp stock at a price below fair market value (e.g., founder shares at $0.001/share when the company was already worth more), the discount is taxable as employment income under Chapter 3C, ITEPA 2003. However, if the shares were acquired at incorporation when the company had no value, there is no discount to tax.
- Restricted securities: If your shares are subject to restrictions (e.g., vesting, repurchase rights), Chapter 2 of Part 7 applies. The tax charge can be deferred until restrictions are lifted, or you can make a Section 431 election (the UK equivalent of a US 83(b) election) to be taxed on the unrestricted market value at grant. This is usually beneficial for founders receiving shares early when the value is low.
- Stock options: If you received stock options (not shares), the taxable event is at exercise (Chapter 5, ITEPA 2003). The gain (market value at exercise minus exercise price) is employment income subject to income tax and potentially NI.
83(b) election and Section 431: A US 83(b) election is filed with the IRS. It does not have any direct effect on UK tax. If you want the equivalent treatment in the UK, you must also make a Section 431 election with HMRC (jointly signed by you and the employer). The two elections are independent. Making a US 83(b) election without a UK Section 431 election means your UK tax position remains based on the default rules (tax when restrictions lapse).
Annual ERS Return
If a UK employer (including a UK Ltd parent) issues or facilitates the issue of employment-related securities, the employer must file an annual ERS return with HMRC by 6 July following the end of the tax year.
- The return is filed online via HMRC's ERS service (PAYE Online for employers)
- It covers all share issuances, option grants, exercises, and disposals during the tax year
- If the shares were issued by the US C-Corp directly (not through a UK employer), the UK employer reporting obligation may not apply — but you still have personal reporting obligations on your SA100/SA106
- Failure to file: £100 penalty, increasing quarterly up to £400; additional penalties for deliberate non-compliance
Capital Gains Tax on Disposal of US Shares (SA108)
When you sell shares in your Delaware C-Corp (e.g., in a secondary sale, acquisition, or IPO), the gain is subject to UK Capital Gains Tax (CGT). Report it on the SA108 supplementary page.
Key CGT provisions:
- Annual exempt amount: £3,000 for 2025/26 (reduced from £6,000 in 2023/24 and £12,300 in 2022/23). Gains below this amount are tax-free.
- CGT rates: 18% (basic rate taxpayers) or 24% (higher/additional rate taxpayers) for 2025/26. These rates were increased from 10%/20% in the October 2024 Autumn Budget.
- Business Asset Disposal Relief (BADR): Formerly "Entrepreneurs' Relief." If you held at least 5% of the shares and voting rights, were an officer or employee, and held for at least 2 years, the rate is 14% (increasing to 18% from April 2026) on gains up to a £1 million lifetime limit. This is significantly less beneficial than it once was.
- Treaty treatment: Under Article 13 of the UK-US treaty, capital gains on shares are generally taxable only in the country of residence. As a UK resident, your gains are UK-taxable and generally NOT US-taxable (unless the C-Corp is a US Real Property Holding Corporation, which is unlikely for a SaaS startup). This means no US tax to offset, and you pay UK CGT in full.
Base cost: Your CGT base cost is the amount you paid for the shares (or the market value at the time they were taxed as employment income, if applicable). If you made a Section 431 election and paid tax on the shares at grant, your base cost is the unrestricted market value at that time. Convert the USD base cost to GBP using the HMRC exchange rate at the date of acquisition.
Practical Tips for UK Founders
Record-Keeping Best Practices
- Maintain dual-currency accounting records. Keep all C-Corp transactions in USD (for US filing) and convert to GBP (for UK filing). Use a spreadsheet or accounting software that supports multi-currency.
- Download HMRC exchange rates at the start of each tax year. Bookmark the HMRC exchange rate page and download the monthly/annual rates as soon as they are published. Apply them consistently.
- Keep W-2 forms, 1099s, and 1042-S forms. These US forms document your income and tax withheld. You will need them for both US and UK filings. The 1042-S specifically shows treaty-rate withholding on dividends.
- Track travel days meticulously. Your UK/US travel days affect your tax residency (Statutory Residence Test), your eligibility for the Totalization Agreement, and potential PE risk for the C-Corp. Use a calendar app or spreadsheet to log every day spent in each country.
- Retain records for at least 6 years (HMRC's standard enquiry window). For years involving offshore income, HMRC can go back up to 20 years in cases of deliberate non-disclosure.
Filing Order: US First, Then UK
Because the US tax year (calendar year) ends before most of the UK tax year, and US filing deadlines come before the UK's 31 January deadline, the recommended approach is:
- Close your C-Corp's US books for the calendar year (31 December).
- File C-Corp Form 1120 (and Form 5472 if applicable) by 15 April. This establishes the corporate tax liability.
- File your US personal return (Form 1040-NR if applicable) by 15 April (or 15 June with automatic extension for non-residents abroad).
- With actual US tax figures in hand, complete your UK SA100 + SA106 by 31 January. You now know exactly how much US tax to claim as Foreign Tax Credit.
Consider a UK/US Dual-Qualified Accountant
Cross-border tax compliance for UK founders with US companies is among the most complex personal tax situations. A single mistake can cost thousands in penalties or unnecessary tax. Consider the following when choosing professional support:
- Dual-qualified practitioners who hold both a UK accounting qualification (ACA, ACCA, CTA) and US credentials (CPA, EA) are rare but invaluable. They understand both systems and can optimize across jurisdictions.
- Separate UK and US advisers is more common. Ensure they communicate with each other — particularly around FTC claims, salary levels, and PE risk.
- Cost: Expect to pay £2,000-£5,000 annually for combined UK/US personal tax preparation, depending on complexity. This is a worthwhile investment relative to the tax at stake.
- Engagement timing: Engage your advisers before your first financial year-end, not after. Structuring decisions (salary level, dividend timing, Section 431 elections) need to be made proactively.
Annual Filing Deadline Calendar
This calendar consolidates all US and UK filing deadlines for a UK founder with a Delaware C-Corp. Bookmark this and set reminders at least 4 weeks before each deadline.
| Deadline | Filing | Jurisdiction | Penalty for Late Filing |
|---|---|---|---|
| 1 March | Delaware Franchise Tax | US (Delaware) | $200 + 1.5%/month interest |
| 15 April | Form 1120 + Form 5472 | US (IRS) | $25,000 per Form 5472 not filed |
| 1 June | Delaware Annual Report | US (Delaware) | $200 penalty; company may be voided |
| 5 July | SA Registration | UK (HMRC) | No direct penalty but delays filing |
| 31 October | Paper SA100 | UK (HMRC) | £100 immediate; escalating |
| 31 January | Online SA100 + SA106 | UK (HMRC) | £100 immediate; £10/day after 3 months; 5% of tax after 6 months |
Frequently Asked Questions
Do I need to report my C-Corp's existence to HMRC even if I take no salary or dividends?
There is no specific obligation to report the mere ownership of a foreign company on your personal self-assessment return if you receive no income from it. However, if you have a UK Ltd that controls the C-Corp, the CFC rules require awareness of the C-Corp's profits even if undistributed. If HMRC opens an enquiry and discovers an undisclosed overseas company, even without income, it raises red flags. As a practical matter, many advisers recommend disclosing the C-Corp's existence in the "Additional Information" box of your SA100 to demonstrate transparency, especially given HMRC's offshore focus.
Can I use the remittance basis for my US income?
The remittance basis is available only to UK residents who are not domiciled in the UK ("non-doms"). If you are a British citizen domiciled in the UK, you are taxed on the arising basis (worldwide income, regardless of whether you bring it to the UK). Non-dom status allows you to pay UK tax only on foreign income remitted to the UK — but this is being reformed. From April 2025, the UK government has replaced the remittance basis with a new regime for the first 4 years of UK residence. If you are a long-term UK resident and domiciled in the UK, the remittance basis is not available. You must report all US income on the arising basis.
What if HMRC and the IRS disagree on how my income should be taxed?
The UK-US tax treaty includes a Mutual Agreement Procedure (MAP) under Article 25. If you believe you are being taxed in a way that is not in accordance with the treaty, you can request that the "competent authorities" of both countries (HMRC and the IRS) negotiate a resolution. This is a formal process that can take 1-3 years but is available for genuine double taxation situations. You must make a MAP request within 3 years of the first notification of the action resulting in taxation not in accordance with the treaty.
Do I need to pay UK Class 1 NI on my US salary?
If your US C-Corp does not operate a UK payroll, there is no employer to collect Class 1 NI through PAYE. However, if you are working in the UK for a foreign employer, HMRC's position is that you may still have a UK NI liability. The cleanest solution is to apply for a Certificate of Coverage under the UK-US Totalization Agreement, which formally establishes which country's social security system applies. If the certificate confirms UK NI applies, you would need to arrange payment (potentially through a "host country" payroll arrangement or direct payment). If it confirms US FICA applies, you remain in the US system. Either way, you pay into only one system.
What exchange rate should I use for my SA106?
Use HMRC's published exchange rates. You can choose between the average rate for the tax year or the spot rate on the date of each transaction, but you must be consistent throughout the tax year. For most founders, the annual average rate is simplest. Find the rates at gov.uk exchange rates. If you have large, infrequent transactions (e.g., a one-time dividend or share sale), using the spot rate on the transaction date may be more accurate and potentially more favourable depending on currency movements during the year.
Need Help with UK-US Cross-Border Tax Compliance?
HMRC reporting for US company owners is complex and the penalties for errors are steep. Schedule a consultation to discuss your specific obligations, optimize your filing strategy, and ensure full compliance in both jurisdictions.
Schedule a ConsultationSergei Tokmakov, Esq. — California Bar #279869