Introduction: EB-5 Visa Tax Begins Long Before the Green Card
EB-5 visa tax is the combined US and UK tax position of a British investor who buys a green card through an American investment. It is not one charge. Instead, it is a sequence of charges. It starts in Britain when you raise the money. It ends, years later, with the US exit tax rules.
Most guides to EB-5 visa tax are written by fund sponsors and immigration firms for investors from China, India and Latin America. They explain worldwide taxation in general terms and stop. As a result, they miss the British half of EB-5 visa tax. None covers how HMRC taxes the fund itself. None explains what it costs to extract $800,000 from a UK company. Nor do they address a green card holder who still lives in London.
This guide fills those gaps with 2026 figures and a worked example. At TaxYork, we prepare US and UK tax returns for investors, bankers and company owners. Therefore, we see each stage from both sides of the Atlantic.
What EB-5 Visa Tax Actually Covers
The EB-5 programme gives permanent residence to an investor whose capital creates at least ten full-time US jobs. For petitions filed since 15 March 2022, the USCIS rules on the EB-5 classification set the minimum at $1,050,000. The figure falls to $800,000 in a targeted employment area or infrastructure project. Most British investors use a regional centre fund at the lower figure.
Therefore, EB-5 visa tax has five distinct layers. First comes the UK tax cost of raising the capital. Second, both countries tax the fund's income. Third, there is the day US tax residency begins. Next comes what HMRC still taxes after you leave. Finally, the exit tax clock starts with your first year as a green card holder.
The 2026 and 2027 Programme Dates That Matter
Three dates shape the timing. First, the grandfathering date of 30 September 2026 has now passed. Petitions filed by then continue to be processed even if Congress lets the regional centre programme lapse. Second, the programme itself is authorised only until 30 September 2027. Third, USCIS confirms that the first inflation adjustment to the minimum investment applies to petitions filed on or after 1 January 2027. Industry projections put the new figures at $900,000 or more for targeted areas and about $1.2 million otherwise. However, the government has not yet published them.
Notably, British-born investors face no visa queue. Visa numbers follow your country of birth rather than your passport. Moreover, the October 2026 Visa Bulletin shows every EB-5 category as current for the United Kingdom. Consequently, your EB-5 visa tax timetable depends on petition processing and your own planning, not on a backlog.
Funding the Investment: The UK Tax Cost of Raising $800,000
At $1.35 to the pound, $800,000 is about £593,000. With a typical fund administration fee of around $80,000, you need roughly £652,000 before legal costs. Most EB-5 visa tax guides ignore what it costs to raise that sum. How you raise it is the first EB-5 visa tax decision, and it is purely a UK one.
Selling Investments and UK Capital Gains Tax
Selling shares or funds held outside an ISA triggers capital gains tax. For 2026/27, HMRC's capital gains tax rates are 18% within the basic rate band and 24% above it. The annual exempt amount is only £3,000. However, the tax falls on the gain alone, not on the proceeds. A portfolio with a 40% built-in gain therefore costs about 9.6% of the amount raised. For most investors, this is the cheapest taxable route into the programme.
Extracting Cash From Your Own Company
Company owners often look to their business first. That route is expensive. A dividend to an additional rate taxpayer bears 39.35%, as the GOV.UK guide to tax on dividends confirms. To net £652,000, you must therefore declare a dividend of about £1,075,000 and pay roughly £423,000 to HMRC. In contrast, a loan from your own company triggers a corporation tax charge on the company. It also creates a US problem once you hold the green card. Consequently, extraction is rarely the right answer to the first EB-5 visa tax question.
Borrowing Against Property and Using Your Pension
The programme rules allow borrowed capital. Under the USCIS Policy Manual chapter on EB-5 capital, debt counts where you are personally and primarily liable and your own assets secure it. A loan secured on a mortgage-free London home therefore raises the full amount with no UK tax at all. Moreover, once you are a US resident, the interest may qualify as investment interest on your US return, within limits.
Alternatively, some investors over the minimum pension age use the 25% tax-free lump sum, which is capped at £268,275. Anything drawn beyond that is taxed as income at up to 45%. As a result, the pension is a useful top-up but a poor primary source.
Seven Years of Tax Returns Go to USCIS
The same Policy Manual chapter requires evidence of the lawful source of your funds. For petitions filed since May 2022, that includes tax returns for the past seven years. For a British investor, this means Self Assessment returns, tax calculations and employer certificates.
This requirement has a direct EB-5 visa tax consequence. If your UK filing history has gaps, the petition exposes them. Undeclared rental income, an offshore account or missed UK tax returns will all surface in the source of funds file. Therefore, correct the UK record first. Our guide to catching up on missed UK tax returns explains the process. The same discipline applies to British citizens.
How the EB-5 Investment Itself Is Taxed
Your capital normally sits in the fund for five years or longer. During that time, it produces a small return and a surprising amount of paperwork. Sponsor guides explain this part of EB-5 visa tax only from the American side.
Schedule K-1 and US Withholding Before the Green Card
Most regional centre funds are limited partnerships or limited liability companies that lend to a developer. Each year, the fund issues a Schedule K-1 showing your share of its income, often between 0.25% and 1% of your capital. You need an Individual Taxpayer Identification Number from the IRS to receive it.
Before you become a US resident, you are a foreign partner. Under the IRS rules on partnership withholding, a fund with business income must withhold tax at 37% on your share. It reports that tax on Form 8805. Alternatively, where the fund treats the income as interest, the US-UK treaty generally removes US tax for a UK resident. In either case, you may need a Form 1040-NR to settle the position or reclaim the excess.
How HMRC Taxes the Fund: Partnership or Company
While you remain UK resident, HMRC taxes the fund's income as well. The treatment depends on the entity. HMRC's list of overseas entity classifications treats a US limited partnership as transparent and a US limited liability company as opaque.
Accordingly, if your fund is a limited partnership, HMRC taxes your share of the interest as it arises, at up to 45%. It does so whether or not the fund pays the income out. From 6 April 2027, the top rate on savings income rises to 47%. If your fund is an LLC, HMRC usually taxes only what it distributes, as a dividend at up to 39.35%. A 2026 consultation proposes to change that treatment, as we explain in our guide to the reverse hybrid reform for US LLCs. Read the offering documents with this point in mind. The classification also decides whether a UK credit is available for US tax withheld, so it shapes your EB-5 visa tax bill throughout the holding period.
The Administration Fee, Return of Capital and Currency
The administration fee is generally not deductible in either country. Neither are your immigration legal fees. When the fund eventually repays you, a return of exactly what you invested produces no US gain. However, if the project fails, your US capital loss can offset only capital gains plus $3,000 of other income each year.
Currency adds a British twist to EB-5 visa tax. If you are still UK resident when the fund repays you, HMRC measures the result in sterling, not dollars. A weaker pound can therefore produce a taxable UK gain on an interest in an opaque fund. That is so even though you received back the same number of dollars. Once you are a US resident, the fund's income becomes taxable in America at up to 37%. The 3.8% net investment income tax applies as well.
When US Tax Residency Starts for an EB-5 Investor
The residency starting date is the hinge of EB-5 visa tax planning. Many sponsor guides state that residency begins when the petition or the green card is approved. That is wrong, and the error can be costly.
The Green Card Test: The First Day You Are Present
Approval of your petition changes nothing for tax. Neither does the issue of your immigrant visa in London. Under the IRS rules on residency starting dates, the green card test looks at presence. Residency starts on the first day in the calendar year on which you are in the United States as a lawful permanent resident. If you receive the visa abroad, that is the day you first enter with it.
From that day, the IRS taxes your worldwide income. Before it, you are a nonresident alien, taxed only on US-source income. Every EB-5 visa tax plan is therefore built around that single date. The year of entry is therefore a dual-status year, which we explain in our guide to the dual-status tax year for US-UK movers. The IRS page on the green card test confirms that day counts are irrelevant once you hold the status.
Consular Processing Gives You a Six-Month Window
An immigrant visa is valid for no more than six months from issue, under the State Department regulation on immigrant visa validity. You choose the day you travel within that period. Consequently, you control your residency starting date to the day.
That window is the most valuable part of EB-5 visa tax planning. In particular, beware the short activation trip. Many families fly out for a week to activate the visa. They then return to Britain to finish a business sale or a school year. However, that first entry starts worldwide US taxation, even if you spend the rest of the year in London.
If You Are Already in America on Another Visa
Some British investors apply from inside the United States while holding E-2, L-1 or H-1B status. If so, you are probably already a US tax resident under the substantial presence test. Your starting date is then the earlier of the two tests. Nevertheless, the green card still changes your EB-5 visa tax position. It ends certain treaty benefits that are reserved for non-immigrants, as our guide to L-1 visa tax explains for UK pension contributions. It also starts the exit tax clock described below.
Conditional Residence Is Full Residence, for the Whole Family
Your first green card is conditional for two years. For tax, however, a conditional resident is a lawful permanent resident in every respect. Furthermore, your spouse and unmarried children under 21 receive the same status. Each of them becomes a US tax resident on their own first entry. A 19-year-old with a stocks and shares ISA therefore acquires US filing duties on the same day you do. In short, EB-5 visa tax is a family matter, not an individual one.
What to Fix Before Your First Entry
The United States gives no step-up in basis on arrival. Therefore, every unrealised gain and every unsuitable structure you bring through the airport becomes a US tax matter. Our guide to pre-immigration tax planning for Britons moving to the US covers the full checklist. For EB-5 visa tax purposes, four items matter most.
Gains and the Two-Country Arithmetic
Selling before entry does not always save tax for a British resident. UK capital gains tax at 24% and the US rate of 23.8%, including the net investment income tax, are almost identical. The real aims are different. First, you want to avoid both countries taxing the same gain in an overlap year. Second, you want to avoid the 3.8% net investment income tax. The Federal Circuit held in August 2026 that treaty credits do not relieve it.
The best EB-5 visa tax outcome arises in the gap between the two systems. Gains realised after you leave UK residence, but before your first entry as a permanent resident, can fall outside both regimes. However, the UK temporary non-residence rule described below can recapture them.
ISAs and UK Funds
Your ISA stops being a shelter on the day you enter. Furthermore, UK funds, investment trusts and exchange-traded funds are usually passive foreign investment companies. The IRS taxes them punitively and requires Form 8621 every year. Selling them inside the ISA before entry costs nothing in Britain and nothing in America. Selling them afterwards can cost 37% of the gain plus an interest charge. No other step in EB-5 visa tax planning offers a better return for less effort.
Your UK Company
If you own 10% or more of a UK company, US residency makes you a US shareholder. Where US shareholders together hold more than half, the company becomes a controlled foreign corporation. You then file Form 5471 each year and may pay US tax on undistributed profits. Consequently, a planned sale, a large dividend or a restructuring belongs before the entry date, not after it. For company owners, this is usually the largest single item in the EB-5 visa tax plan.
The Pension Lump Sum
The 25% lump sum is tax-free in Britain. Its US treatment for a resident is contested, and the IRS has never ruled on it. Taking the lump sum while you are still a nonresident alien removes the question entirely. In contrast, growth inside a registered UK pension remains protected by the treaty after you arrive. Therefore, you need not dismantle the scheme.
Leaving Britain: What HMRC Still Taxes
A green card does not end UK residence. Only the Statutory Residence Test does. Getting this half of EB-5 visa tax wrong leaves you resident in both countries at once.
The Statutory Residence Test for an Investor
Employees usually leave UK residence under the full-time work overseas test. An investor who is not taking a job cannot rely on it. Instead, you must count days and ties under HMRC's Statutory Residence Test guidance. A UK home that stays available, a spouse or minor children in Britain, and 90-day visits all count against you. As a result, an investor who keeps the London house and returns for long summers can remain UK resident for years.
Split-year treatment is also harder. The usual route for a non-working investor requires you to cease having any UK home. You must also establish a sufficient link with America within six months. Our guide to UK split-year treatment walks through the cases. You should also tell HMRC that you have left by sending form P85.
The Five-Year Temporary Non-Residence Rule
Gains you realise while non-resident are normally outside UK capital gains tax, apart from UK property. However, if you return within five years, HMRC taxes gains on assets you owned before departure in the year you come back. Certain income, including dividends from your own company and pension lump sums, falls under the same rule. We cover the detail in our guide to temporary non-residence. Because many families treat the green card as an experiment, this rule belongs in every EB-5 visa tax plan.
UK Property and Rental Income
UK property stays within the UK net permanently. Rent from a let home remains taxable in Britain under the non-resident landlord scheme. A sale requires a UK return within 60 days. Meanwhile, the IRS taxes the same rent and the same gain once you are resident, with a credit for the UK tax. Notably, the US main-home exclusion of $250,000 per person is far smaller than UK private residence relief. A London home sold after entry can therefore produce US tax where Britain charges none, which is an EB-5 visa tax cost that few families expect.
Holding a Green Card While Still Living in Britain
Not every investor moves. Some want the card as an option for the future or for their children's education. That choice creates the least understood EB-5 visa tax problem of all.
Worldwide US Tax With No Day Count
Once you have entered as a permanent resident, you remain a US tax resident until the status is formally surrendered or revoked. Days are irrelevant. This is the harshest rule in EB-5 visa tax. A British investor who activates the card and returns to London must therefore file a full US return every year. That return reports salary, dividends, ISA income and gains, exactly as a US citizen in Britain would.
The reporting follows too. You must file an FBAR through FinCEN's BSA E-Filing system if your non-US accounts exceed $10,000 in total at any point in the year. In addition, Form 8938 applies at thresholds set out in the IRS comparison of Form 8938 and FBAR requirements.
The Treaty Tie-Breaker and Its Price
The US-UK treaty offers an apparent escape. Under Article 4 of the US-UK income tax treaty, a series of tests assigns a dual resident to one country, starting with the permanent home. A green card holder living in London can therefore claim UK residence for treaty purposes. The claim is made on Form 1040-NR and disclosed on Form 8833.
However, the price is high. Under the federal naturalisation regulation at 8 CFR 316.5, a permanent resident who claims nonresident alien status for tax raises a rebuttable presumption. The presumption is that they have relinquished permanent residence. In other words, the claim that saves tax can cost the card. Moreover, it does not remove the FBAR duty. For an investor who has spent $800,000 to obtain the status, this EB-5 visa tax saving is rarely worth the risk.
Missed US Tax Returns and Missed FBARs
In our experience, many British green card holders in this position simply never file. They assume that living in Britain keeps them outside the US system. The result is several years of missed US tax returns and missed FBAR filings. They usually come to light when the family applies to remove conditions or to naturalise. Correcting this is routine tax preparation work, but it is far cheaper before USCIS asks for the returns. Our FBAR and FATCA compliance service deals with the reporting side.
The I-829, Citizenship and the Exit Tax Clock
The later stages of the immigration process have their own EB-5 visa tax consequences. Three of them deserve attention from the start.
Removing Conditions and Your Tax Record
You must file Form I-829 in the 90 days before the second anniversary of your admission as a conditional resident. Later, a naturalisation application asks directly whether you have filed your tax returns and whether you ever claimed to be a nonresident. Therefore, your US tax record becomes part of your immigration record. File as a resident, on time, from the first year.
Eight Years in Fifteen: The Long-Term Resident Test
The US exit tax applies to long-term residents as well as citizens. You become a long-term resident once you have held a green card in at least eight of the last fifteen tax years. Any part of a year counts as a full year, and conditional years count. An investor who first enters in September 2028 therefore reaches year eight on 1 January 2035, a little over six years later.
Why EB-5 Investors Are Almost Always Covered Expatriates
A long-term resident who gives up the card is a covered expatriate if their net worth is $2 million or more. The same applies if their average annual US tax for the previous five years exceeds $211,000 for 2026. Someone who could commit $800,000 to an immigration investment usually passes the net worth test easily. Covered status triggers a deemed sale of worldwide assets, with a 2026 exclusion of $910,000 under IRS Revenue Procedure 2025-32.
Consequently, every EB-5 visa tax plan needs a decision point before year eight. Either commit to America, or surrender the card on Form I-407 while the exit tax cannot apply. Our guide to green card abandonment and the exit tax explains the mechanics.
Case Study: A Leeds Founder, an $800,000 Fund and a Florida Move
The following illustration uses realistic figures to show how EB-5 visa tax planning works in practice.
The Facts
Richard, 56, is a British citizen born in Leeds. He founded a software company, which he expects to sell in 2028 at a gain of £6 million, or about $8.1 million. He also holds a £1.6 million share portfolio and a £1.2 million pension. His £400,000 ISA is invested in UK funds with a £150,000 gain. He and his wife plan to move to Florida, which has no state income tax.
In September 2026, he filed his petition and invested $800,000 in a rural regional centre fund, plus an $80,000 fee. The fund is a limited partnership. To raise £652,000, he sold shares carrying a £252,000 gain. After the £3,000 exemption, his UK capital gains tax at 24% was £59,760. A dividend from his company would have cost about £423,000 instead, so his EB-5 visa tax planning began with the funding route.
The Mistake He Nearly Made
His immigrant visa is issued in April 2028. Richard planned a short trip to Miami in May to activate it, before returning to London to complete the company sale in June. That trip would have made him a US resident from May.
The sale would then have been taxable in both countries. UK tax would have been £1.38 million, being 18% on the first £1 million and 24% on the rest. That would have covered the US income tax through the foreign tax credit. However, the 3.8% net investment income tax on $8.1 million, or $307,800, has no credit. In addition, his company would have become a controlled foreign corporation for its final months.
What He Did Instead
Richard completes the sale in June 2028 as a UK resident who has never entered America as an immigrant. He pays the UK tax and nothing to the IRS. In July, he sells the UK funds inside his ISA and holds cash, at no tax cost in either country. Afterwards, the same $202,500 gain would have borne about $75,000 of US tax before interest. He also takes his £268,275 pension lump sum free of UK tax, removing a contested US exposure of up to $134,000.
The couple let their London home on a commercial lease and fly to Miami on 1 September 2028. That date is their US residency starting date and, with split-year treatment, the end of their UK residence. Meanwhile, the fund's 0.5% return of $4,000 a year, taxed by HMRC at 45% until then, becomes US taxable income.
The Result and the Calendar
Careful sequencing kept roughly $517,000 out of the US net. Richard's 2028 return is a dual-status return with an FBAR and Form 8938 for his remaining UK accounts. His Form I-829 window opens in June 2030. His eighth green card year begins on 1 January 2035. The family must therefore decide by the end of 2034 whether to stay for good. If they return to Britain within five years, broadly before September 2033, the temporary non-residence rule will also need checking.
How TaxYork Can Help
We provide comprehensive US and UK tax preparation and compliance for British investors throughout the EB-5 process. Our EB-5 visa tax work joins the two systems rather than treating them separately.
Before You Invest and Before You Enter
Before you file, we review your UK filing history for the source of funds file. We also compare the tax cost of each funding route. Before you enter, we fix your residency starting date and sequence disposals. In addition, we deal with ISAs, funds and company interests, and prepare the UK departure. This forms part of our wider cross-border planning service.
Every Year Afterwards
Each year, we handle your EB-5 visa tax compliance. That covers your federal return and Schedule K-1 reporting, your FBAR and Form 8938. It also covers your UK Self Assessment return where one is still needed. We also keep your tax record ready for the I-829 and naturalisation stages, and we track the exit tax clock. For Britons considering other routes, see our guides to E-2 visa tax and H-1B visa tax. Our US tax return preparation service covers the annual filings.
Conclusion
EB-5 visa tax is not a single event at the border. It begins when you sell assets in Britain to fund the investment. It continues through the fund's income in two countries. Above all, it turns on the exact day you first enter America as a permanent resident. It then follows you through UK departure, annual US reporting and, eventually, the eight-year exit tax test.
Therefore, approach EB-5 visa tax in the right order. Choose the cheapest UK funding route and clean up your UK filing history. Next, check how HMRC classifies your fund. Most importantly, treat your first entry as a tax date, and complete sales, ISA changes and pension withdrawals before it. Handled that way, your EB-5 visa tax position stays predictable in both countries.
Contact Us
If you are planning an EB-5 investment, speak to us before your next step. The same applies if you already hold a green card and have not yet filed. Book a consultation with our US-UK specialists to review your EB-5 visa tax position. You can also email hello@taxyork.com or call 020 3488 8606.
Disclaimer
This article provides general information about EB-5 visa tax for British investors and their families. It does not constitute tax, legal or immigration advice for your specific circumstances, and it is not a recommendation to invest in any fund or project. UK and US tax and immigration rules change frequently, and the case study is illustrative only. You should obtain professional guidance based on your own facts before acting. TaxYork accepts no liability for decisions taken on the basis of this article alone.