The consultation seeks views on legislative changes to address high effective tax rates faced by UK-resident individuals who are members of United States limited liability companies (LLCs) and other reverse hybrids.
UK’s His Majesty’s Revenue and Customs (HMRC) has initiated a consultation on 10 June 2026 regarding the measures to mitigate double taxation affecting UK-resident individuals who are members of United States limited liability companies (LLCs) and other reverse hybrids.
The government intends to address the taxation of UK resident individuals who are members of reverse hybrid entities, such as United States Limited Liability Companies (US LLCs). These individuals can suffer unintended high effective tax rates on income from these entities.
This consultation sets out the current tax position for UK resident individuals who are members of reverse hybrids such as LLCs and identifies where high effective tax rates may arise for these individuals due to entity classification mismatches between the UK and other jurisdictions.
The consultation also seeks to understand the effect of this issue on individuals and businesses. It asks for views on proposals for changes to legislation to mitigate this issue.
The government is open to receiving representations from all interested parties and stakeholders and is especially interested in responses from
- individuals who are members of LLCs or other reverse hybrids
- other taxpayers, investors and businesses potentially impacted by this issue
- tax advisory, accountancy and legal firms
- representative bodies
- industry bodies
This consultation will run until 31 July 2026.
