Reeves aims to lure US workers through tax reform
Chancellor Rachel Reeves is considering a tax break for US workers by introducing fresh reform, reflecting her drive to lure more wealthy migrants despite a wider crackdown on immigration.
The government has launched a consultation on the double taxation for investors who may be based in the UK but who work for US firms that act as limited liability companies (LLC), a business structure that enjoys a specific tax treatment.
Among the firms that use this company structure are Google, Budweiser owner Anheuser-Busch and Star Wars creator Lucasfilm.
A government document said a consultation into double taxation was part of a drive to attract “talented, globally mobile individuals” and boost investment.
It adds to recent moves by the government to lure highly-skilled migrant workers through refunding visa fees for scale-up firms and speeding up processing for visa applications made by a select group of tech firms.
Reeves appeals to wealthy workers
In this consultation, Reeves is aiming to address a technical issue that means some individuals suffer from “unintended” tax burdens on income due to how LLCs are structured in different jurisdictions.
Workers at LLCs are often double taxed through both the US and the UK when profits shares are distributed and the company is subject to UK taxes. It means the effective tax rate on income can jump beyond 75 per cent.
Treasury officials said they were keen to ensure workers at large firms are taxed “in a way that matches the tax treatment” received in the US.
Reeves told a gathering of entrepreneurs in No 11 Downing Street that changes would be made “shortly after” the end of a consultation in July.
The consultation document said fresh legislation may need to be introduced to solve double taxation, which could take months to pass through parliament.
The government also said it did not expect reforms to have “any significant macroeconomics impact” although the Office for Budget Responsibility will be responsible for scrutinising measures.
A relations manager at the pensions company Utomost said the consultation did not address the UK tax system’s competitiveness against the US, particularly after inheritance tax would be applied to foreign nationals following the abolition of the non-dom regime.
Reeves’ targeted push at luring skilled workers from abroad comes against a wider government crackdown on immigration, with net migration falling to 171,000 in 2025 from a previous peak of 944,000.
New Home Office data pointed to a further decline in visa applications.
The number of skilled worker visa applications dropped by nearly a half on the year, with just 31,500 applications being made in the year to May.
There was also a large drop in the number of applications from workers’ dependents for visas.