US/UK Cross-Border Tax
Advisors in San Francisco
US and UK tax for UK founders building in the US and British professionals at Bay Area tech companies: equity, residency, and dual filing.
Equity Fluency in Two Tax Codes
The Bay Area runs on equity, and equity is where US and UK tax law diverge most sharply. An EMI option that was highly efficient in London loses its favoured status the moment its holder becomes a US taxpayer. An ISO exercise that looks clean federally can trigger a large alternative minimum tax bill. QSBS can shelter millions federally while California conforms to none of it. Our San Francisco practice works on these problems every day. We advise UK founders through Delaware flips and US fundraising, British employees through option exercises and RSU vesting across two jurisdictions, and returning executives through the UK re-entry rules, and in every case we work in both tax codes at once.
A Delaware Flip, Priced Before Signing
Case Study: San Francisco Cross-Border Engagement
A British founder relocating to San Francisco for a US accelerator was told to "flip" her UK limited company under a new Delaware parent as a condition of investment, months before she understood what the exchange meant for her personally.
Sequenced the flip before US residency began, structuring the exchange to qualify for UK share-for-share rollover treatment so no UK gain crystallised on the swap.
Started the founder's QSBS clock on the new Delaware stock and documented Section 1202 eligibility, preserving up to $10M of federal gain exclusion on a future exit.
Mapped the ongoing compliance work: Form 5471 for the UK subsidiary, GILTI exposure analysis, and California's non-conformity, so the post-flip structure held no surprises.
£0
UK Capital Gains Tax Crystallised on the Flip
Cross-Border Technical Work
EMI and ISO Options Across the Border
The UK's best equity incentive and America's do not recognise each other, and California adds its own layer.
EMI options enjoy no special status in the US: a UK-granted EMI option exercised by a US tax resident produces ordinary income on the spread, with the historic UK service period allocated under the treaty's employment income article. ISOs, conversely, carry no UK recognition, and their exercise spread feeds the US alternative minimum tax. We plan exercise timing around residency changes, allocate income between jurisdictions by workday sourcing, coordinate UK NIC and US payroll positions, and model AMT before the exercise is irrevocable, not after.
QSBS for the Cross-Border Founder
Section 1202 can exclude up to $10M of gain federally, if the stock, the holder, and the timeline all qualify.
Qualified Small Business Stock excludes the greater of $10M or 10x basis from federal capital gains tax after a five-year hold in original-issue C-corporation stock. For UK founders the traps are structural. Stock in the UK Ltd never qualifies, so the QSBS clock starts only at the Delaware flip, and the exchange must be executed to preserve eligibility. California does not conform, and taxes the full gain at rates up to 13.3% regardless of the federal exclusion. We document eligibility from day one and plan exits, including residency at the time of sale, around both answers.
The UK Subsidiary as a CFC: 5471, GILTI, and Repatriation
After the flip, the UK company is a controlled foreign corporation, and the US shareholder's reporting burden begins.
A US parent or US-resident founder holding a UK company triggers Form 5471, an information return with severe penalties for non-filing, and the GILTI regime, which taxes the UK subsidiary's active earnings currently in the US even when nothing is distributed. UK corporation tax at 25% typically supports high-tax exception or foreign tax credit positions that reduce GILTI to little or nothing, but only when elections are made and computations done properly. We handle the annual mechanics and design dividend and intercompany flows so cash moves across the Atlantic without leaking tax.
Common Questions in San Francisco
I have EMI options from my UK employer and I am moving to San Francisco. Should I exercise before I move?
Often, yes, but it is a calculation, not a rule. Exercising while solely UK-taxable preserves EMI's favourable treatment on the spread, whereas exercising as a US resident produces US ordinary income with treaty-based allocation of the UK service period. Against that sit the early exercise cost, valuation risk, and the UK capital gains position on a later sale. We model both timelines against your vesting schedule and move date before you commit either way.
Does moving to California affect my UK company shares?
Substantially. Once you are a US tax resident, a UK company you control becomes a controlled foreign corporation: Form 5471 filing, GILTI inclusions on its earnings, and constraints on how you extract value all follow. California taxes your worldwide income on top with no treaty to soften it, because the US/UK treaty does not bind the state. Pre-move restructuring, a Delaware flip, or dividend timing can each change the outcome materially, but only if arranged before residency begins.
I am a Brit at a US tech company. How are my RSUs taxed if I worked in both countries while they vested?
RSU income is generally sourced by where you worked during the vesting period, so a grant that vested across a London-to-San-Francisco move is split between HMRC and the IRS by workdays, with the treaty and foreign tax credits preventing double taxation, provided the allocation is done correctly on both returns. Employers' payroll systems frequently withhold in only one country or over-withhold in both. We reconcile the sourcing, recover the excess, and set the position for future vests.
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