Expanding Your Business Into the United States
Expanding your business into the United States is often the “holy grail” for UK-based brands and digital agencies. The sheer scale of the American market offers unparalleled growth opportunities. However, as of March 24, 2026, the regulatory landscape is shifting faster than many sellers can keep up with. If you are a UK seller operating in the USA, staying compliant is no longer just about filing an annual return; it is about managing a complex, daily data flow to satisfy the Internal Revenue Service (IRS).
The IRS has introduced several significant changes for the 2026 tax year that directly impact international participants. From new excise taxes on moving your profits back home to updated reporting thresholds for foreign-owned entities, the stakes have never been higher. At Sterlinx Global, we act as your Global Tax Compliance Suite, ensuring that while you focus on scaling your sales, your US tax obligations are met with precision and zero stress.
Here are the five critical IRS rule changes every UK seller must understand to navigate 2026 successfully.
1. The New 1% Remittance Excise Tax: Moving Profits is Now More Costly
One of the most significant changes to hit the books on January 1, 2026, is the introduction of a 1% excise tax on applicable remittance transactions. This rule is designed to capture a small percentage of funds sent from the US to international locations when the sender pays the fee.
For a UK seller, this means the cost of doing business just went up. When you transfer your hard-earned USD profits from a US business account back to your UK Limited Company’s Sterling account, you must account for this additional 1% levy. While 1% might sound small, for high-volume sellers moving six or seven figures annually, this can represent a substantial operational cost.
How to stay compliant:
- Track every transfer: Ensure your bookkeeping accurately reflects the excise tax paid on every remittance.
- Update your margins: If you are operating on thin margins, you may need to adjust your US pricing to absorb this new cost.
- Automate your data: Don’t worry about calculating this manually. Our team at Sterlinx Global integrates these calculations into your daily bookkeeping to ensure your year-end accounts are accurate from day one.
2. Updated Foreign Earned Income Exclusion (FEIE) Limits
If you are a UK founder who has spent a significant portion of the year in the US, perhaps overseeing a warehouse setup or attending trade shows, you need to know that the FEIE limit has increased to $132,900 for 2026.
This exclusion allows individuals to exclude a portion of their foreign-earned income from US federal income tax. While this primarily affects your personal tax liability, it has a ripple effect on how you structure your salary and dividends from your US-based activities. It is essential to monitor your “Physical Presence Test” or “Bona Fide Residence” status to ensure you qualify for this higher exclusion.
The benefit for you:
Taking full advantage of the $132,900 exclusion can significantly reduce your overall tax burden, leaving more capital available for reinvestment into your brand. If you are also looking at other markets, you might find our guide on UAE expansion helpful for comparing global tax efficiencies.
3. The SALT Deduction Cap Adjustment: Impacting Your US Nexus
For UK sellers who have established a physical presence, such as inventory stored in a US 3PL (Third Party Logistics) or a registered office, the State and Local Tax (SALT) deduction cap has seen a notable shift. In 2026, the cap has increased to $40,400 for single filers, with phaseouts starting for those earning over $505,000.
This is critical because US tax isn’t just federal; it’s state-level too. If you have “nexus” (a business connection) in states like California, New York, or Texas, you are likely paying state-level taxes. The ability to deduct these against your federal liability is a key part of tax efficiency.
Why this matters now:
The IRS is closely monitoring international sellers who claim these deductions without having the proper “Certificate of Good Standing” or registered business status in the respective states. Maintaining compliance at the state level is just as important as your federal filings. This is why we provide a full-suite compliance service that covers both federal and state-level obligations.
4. Stricter Reporting for Foreign-Owned US LLCs (Form 5472)
Many UK sellers operate via a US LLC (Limited Liability Company) that is 100% owned by their UK Limited Company. While this is an excellent structure for market entry, the IRS has significantly increased its scrutiny on “Foreign-Owned Disregarded Entities” in 2026.
Failure to file Form 5472, which reports transactions between the US LLC and its foreign owner, now carries even more aggressive penalties. In previous years, the penalty for a missing or late Form 5472 was $25,000 per violation. In 2026, the IRS has signaled that they are using AI-driven data matching to identify non-compliant entities faster than ever before.
Your Action Plan:
- Report every transaction: Even if no tax is due, you must report “reportable transactions” like capital contributions or loans between your UK and US entities.
- Stick to deadlines: There is very little leniency for international sellers. Missing a deadline can wipe out your entire year’s profit in a single fine.
- Let the experts handle it: This is exactly where Sterlinx Global excels. You provide us with the raw data, and we ensure every form, including the dreaded 5472, is filed correctly and on time.
5. The 1099-K Threshold Finality: No More Hiding in the Shadows
For years, there was confusion regarding the threshold for third-party settlement organizations (like Amazon, Shopify, or PayPal) to report your sales to the IRS. As of 2026, the IRS has finalized the lower reporting thresholds.
If you sell more than $600 on any US platform, that platform will issue a Form 1099-K to both you and the IRS. This means the IRS has a direct record of your gross sales before you even file your tax return. If your reported income doesn’t match the 1099-K data the IRS has on file, an automatic audit flag is triggered.
How to avoid audit red flags:
This rule makes high-quality bookkeeping non-negotiable. You must ensure that your internal records for returns, refunds, and platform fees are meticulously documented so you can reconcile them against the gross figures on your 1099-K. If you’re also selling in Australia, you might recognize these patterns from the ATO audit red flags we’ve highlighted previously.
Beyond the USA: Managing a Global Portfolio
While the US is a powerhouse, many of our clients are also expanding into Canada, Australia, and the EU. Navigating the IRS is one thing, but when you add Canada’s 2026 tax updates or the complex EU VAT registration requirements, the complexity multiplies.
