Form 8858
IRS, Foreign Disregarded Entities and Foreign Branches
The information return for a foreign entity the IRS disregards, or a foreign branch, such as a UK operation of a US business.
What is Form 8858?
Some foreign operations are invisible for US income tax purposes. A UK branch of a US company is one, and a UK company that has elected to be disregarded is another. Their income flows straight onto the owner's return, and Form 8858 is how the IRS sees what sits underneath.
Reporting a UK operation the IRS looks through
A foreign disregarded entity is a company that is separate under local law but treated as part of its owner for US income tax.
A UK private limited company can often elect this status, which the UK does not recognise. HMRC still taxes the company as a company, while the IRS treats its income and expenses as the owner's own. The two returns then describe the same business in different shapes.
A foreign branch is simpler to picture: a US business carrying on activity in the UK directly, through an office or staff, without a separate company. The UK usually taxes the profits of a permanent establishment in the UK, and the US taxes them again as part of the owner's worldwide income, with a foreign tax credit for UK tax. Form 8858 reports the branch's accounts in its own currency and in dollars.
Filers include US persons who are the tax owners of a foreign disregarded entity or who operate a foreign branch, and certain US persons connected with a controlled foreign corporation or partnership that owns one. The form is attached to the owner's return and follows its due date. Penalties apply for failure to file, and a missing form can leave the statute of limitations open. Currency translation between sterling and dollars needs particular care.
At a glance
- The owner's income tax or information return
- Attached to
- With that return, including extensions
- Due
- HMRC usually taxes the entity or branch separately
- UK treatment
- Accounts reported in functional currency and dollars
- Currency
Figures are for the tax year stated in the official instructions linked below.
How we handle it
- International Tax
US reporting for owners of UK companies and partnerships, and for UK groups with US entities, including Forms 5471, 8858, 8865 and 5472.
- Business Tax Returns
US federal returns for companies, partnerships and LLCs with UK owners, UK parents or UK operations, prepared alongside the UK accounts.
- Treaty Relief
Claims under the US/UK income tax treaty, with Form 8833 disclosure, residence tie-breaker analysis and reduced withholding on US income.
- Financial Statements
Annual accounts for UK companies with US owners and US subsidiaries of UK groups, prepared so they also support the US and UK tax filings.
Where people go wrong
The Form 8858 errors we correct most often.
Who files it
- US companies operating in the UK through a branch or office
- Americans whose UK Ltd has elected to be disregarded
- US partnerships with a UK disregarded subsidiary
- Shareholders of a controlled foreign corporation that owns a disregarded entity
01
Making a check-the-box election without modelling the UK consequences
02
Treating a UK branch as outside the US return because HMRC taxes it
03
Ignoring currency gains and losses when branch profits are remitted
04
Missing that a disregarded entity owned by a CFC still feeds Form 5471
Why US UK Tax Returns
Every form is prepared against the official instructions, and every position on it is one we can point to in the Code, the treaty or HMRC's guidance.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
Why would anyone want their UK company to be disregarded by the IRS?
It can align the timing of UK and US tax, letting UK corporation tax feed directly into the owner's foreign tax credit calculation instead of sitting inside a separate corporation. It also removes some controlled foreign corporation reporting. The trade-off is that the owner reports the company's income directly each year, and the election can be hard to reverse, so the numbers need modelling first.
Our US company has one employee working from home in Manchester. Is that a branch?
Possibly. Whether a UK permanent establishment exists turns on what the employee does, whether they conclude contracts and the treaty's definitions. If there is a permanent establishment, the UK can tax the profits attributable to it and the US side may need Form 8858. Payroll obligations in the UK arise separately and can apply even where no permanent establishment exists.
Does Form 8858 change how much US tax I pay?
The form itself is informational. The tax comes from the underlying income, which is already on the owner's return because the entity is disregarded. What the form does is set out the accounts, the related-party dealings and the currency figures, so errors in it often reveal errors in the return. It depends on the structure whether other forms, such as Form 5471 or Form 8865, apply as well.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
Last reviewed
From the Blog
Need Form 8858 prepared or reviewed?
Tell us where you live, what you hold and which years are outstanding. We will say what applies and what it involves before any work begins.
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