What is GILTI and does it apply to my UK company?

GILTI (Global Intangible Low-Taxed Income) is a US regime that can tax a US shareholder of a controlled foreign corporation on the company's profits currently — even if those profits stay inside the company. If you're a US person owning 10% or more of a UK limited company that's a CFC, it generally applies. For tax years beginning after 31 December 2025, GILTI was renamed NCTI (Net CFC Tested Income), with some mechanical changes, but the core idea is the same.

Do I pay US tax on profits I leave in my UK company?

Potentially yes — that's exactly what GILTI/NCTI targets. The regime was designed to stop US persons deferring US tax by accumulating profits in a foreign company, so it can include those profits on your US return even with no distribution. Elections such as Section 962 and the GILTI high-tax exclusion, plus foreign tax credits, can reduce or sometimes eliminate the actual tax — but the inclusion itself is the default.

What changed when GILTI became NCTI?

Under the 2025 legislation (OBBBA), GILTI was renamed NCTI (Net CFC Tested Income) for tax years beginning after 31 December 2025, alongside mechanical changes to the deduction and the treatment of certain asset-based reductions. The practical effect is that the regime applies somewhat more broadly. Because the specific percentages can change, the important point is the mechanism, not a fixed rate — and the renamed regime should be modelled on current figures for your year.

How can I reduce GILTI/NCTI tax on my UK company?

The main tools are: the Section 962 election (be taxed at corporate rates and access the related deduction and foreign tax credit), the GILTI high-tax exclusion (exclude income taxed abroad above a threshold), and in some cases a check-the-box election to take the company out of CFC status entirely. Which combination is best is highly fact-specific and should be modelled before filing.

Does UK corporation tax offset my GILTI/NCTI?

Not automatically. Foreign tax credits generally cannot be applied against GILTI/NCTI for an individual shareholder unless a Section 962 election is made. This is a common and costly misunderstanding — UK corporation tax paid by the company does not, by default, wipe out an individual's GILTI/NCTI inclusion without the right election.

GILTI and NCTI Rules for Americans with UK Companies

Of all the surprises a US citizen can hit when they own a UK limited company, GILTI is the biggest. It's the rule that can tax you in the US on your company's profits even if you never take the money out — and in 2025 it was renamed NCTI, which has caused fresh confusion. This guide explains how the regime actually works, what the rename changed, and the legitimate ways to reduce its bite.

The short answer

GILTI — renamed NCTI (Net CFC Tested Income) for tax years beginning after 31 December 2025 — can tax a US owner of a UK limited company on the company's profits currently, even if those profits are retained and never distributed. It applies to US persons owning 10% or more of a controlled foreign corporation. The inclusion is the default, but elections (Section 962, the GILTI high-tax exclusion) and foreign tax credits can reduce or sometimes eliminate the actual US tax. Crucially, foreign tax credits generally don't offset an individual's GILTI/NCTI unless a Section 962 election is made.

Key takeaways

GILTI/NCTI can tax you in the US on profits left inside your UK company.
It applies to US persons owning 10%+ of a controlled foreign corporation (CFC).
GILTI was renamed NCTI for tax years beginning after 31 December 2025, with mechanical changes.
By default, an individual's foreign tax credits don't offset GILTI/NCTI — a Section 962 election usually changes that.
Elections and the high-tax exclusion can reduce the hit, but the analysis is fact-specific.

Executive summary

GILTI was introduced to stop US persons sheltering profits inside low-taxed foreign companies. It works by requiring a US shareholder of a controlled foreign corporation (CFC) to include the company's "tested income" on their own US return each year, regardless of distributions. For an American with a profitable UK company, this can mean US tax on money still sitting in the company's bank account. The regime's harshness for individual shareholders comes from a quirk: without a Section 962 election, an individual generally can't use the company's foreign taxes or the corporate-level deduction to offset the inclusion — so UK corporation tax doesn't automatically save you. The 2025 rename to NCTI kept the core mechanism while broadening its reach. The practical response is almost always about elections, not avoidance.

How GILTI/NCTI actually works

Three conditions bring it into play:

Your UK company is a controlled foreign corporation (CFC) — broadly, US persons own more than 50% of it. A UK company wholly owned by one American is a CFC.
You're a US shareholder — you own 10% or more.
The company has "tested income" — broadly, its active business profit, after limited deductions.

If those hold, you include your share of that tested income on your US return in the year it's earned, not the year it's distributed. That's the whole point: it removes the deferral that leaving profit in a company would otherwise give you.

The result for a typical US-owned UK consultancy: the company makes a profit, pays UK Corporation Tax, retains some profit to reinvest — and the US owner faces a GILTI/NCTI inclusion on that retained profit, potentially creating a US tax bill on cash they haven't received.

What the rename to NCTI changed

This is where current accuracy matters, because most existing content online still says "GILTI" with older figures. Here's the balanced, up-to-date picture:

Previous terminology: GILTI — Global Intangible Low-Taxed Income.
New terminology: NCTI — Net CFC Tested Income, for tax years beginning after 31 December 2025, under the 2025 legislation (OBBBA).
What changed: beyond the name, the legislation adjusted the deduction available and the treatment of certain asset-based reductions, with the practical effect that the regime applies somewhat more broadly than before.
Practical impact: the mechanism — current US tax on a CFC's tested income — is unchanged in concept. What shifts is the maths. Because the specific percentages and thresholds can change year to year, we deliberately don't quote a fixed effective rate here; the right approach is to model your actual year on current figures.

The honest takeaway: if you read older guidance quoting precise GILTI rates, treat the numbers with caution and check the current NCTI rules for your tax year.

The big misunderstanding: foreign tax credits

Here's the trap that catches people. You might assume that because your UK company already paid UK Corporation Tax, there's no US tax left to pay on the same profit. For an individual shareholder, that assumption is usually wrong by default — an individual generally cannot use the company's foreign taxes to offset a GILTI/NCTI inclusion unless they make a Section 962 election. Without that election, you can end up taxed in the US on profits the UK already taxed. This single point is why the Section 962 election is so central to American-owned UK companies.

How to reduce GILTI/NCTI — the legitimate tools

There's no magic exemption, but there are real, recognised mechanisms:

Section 962 election — elect to be taxed on the inclusion at corporate rates, which unlocks the corporate-level deduction and the ability to credit the company's foreign taxes. Often the single most effective tool. See our Section 962 guide.
GILTI high-tax exclusion — broadly, income taxed abroad above a threshold rate can be excluded from the regime. UK Corporation Tax rates can make this relevant, but it's an annual election applied consistently across your foreign companies.
Check-the-box election — for a single-owner company, electing disregarded-entity treatment takes the company out of CFC status entirely, removing GILTI/NCTI — at the cost of other consequences (self-employment tax, deemed liquidation). See check-the-box.

Which combination wins is genuinely fact-specific — it depends on your profit, how much you retain, the UK tax paid, and your wider US position. This is modelling territory, not a rule of thumb.

Common mistakes we see

Assuming retained profit is "safe" from US tax — GILTI/NCTI is designed to reach it.
Believing UK Corporation Tax automatically cancels the US tax — not for an individual without a Section 962 election.
Relying on old "GILTI rate" articles that predate the NCTI changes.
Never making an election and overpaying as a result.
Making an election casually without modelling its multi-year consequences.