What’s Being Proposed
HMRC has recently launched several consultations & calls for evidence targeting the tax treatment of globally mobile individuals. Key proposals include:
- Updating taxation of UK resident individual members of US Limited Liability Companies (LLCs) and other reverse hybrids to remove double taxation where investors suffered effective tax rates above 75%. (gov.uk)
- Clarifying National Insurance contributions (NICs) easements for non-resident directors attending some board meetings in the UK but based abroad (in countries without social security agreement). (gov.uk)
Who Will Be Affected
- Individuals with cross-border business structures or investments involving US LLCs and similar entities.
- Non-resident directors serving in UK companies but residing overseas.
- Employers engaging mobile individuals to perform work in hybrid or intermittent UK presence patterns.
What to Do Now
- Review entity structure: assess whether your overseas holding or LLC-type investment creates exposure to reverse hybrid rules and unintended double taxation.
- Estimate potential tax rates based on current structure: some may exceed 75% before reforms.
- Hold off irreversible contracts or decisions, if possible, until consultation ends and final regulations are published.
- Engage with advisors on future planning – consider trusts, residency, Permanent Establishment, or UK tax treaties.
Future Timelines & Expectations
- These are consultations or calls for evidence, not yet legislated. Details could change substantially before enactment. (gov.uk)
- Stakeholder feedback likely to influence definitions, scope, thresholds.
- Watch Finance Bill 2026-27 for eventual legislation incorporating these changes.
Practical Example
Jane is a UK resident investing through a US LLC. Under current rules she may face double withholding or surprise tax liabilities. If reforms proceed in the way HMRC suggests, she may gain relief or reclassification that avoids the higher rates. But until reforms are final, maintain conservative estimates and plan for possible transitional arrangements.