Does anyone have guidance/pointers on implications/opportunity wrt setting up a UK- BTL (a company, buy to let) while in UK (before moving to US) and running it from US.
Initial thought was that our friend can convert their current primary home (in UK) to a BTL rather than selling it. And while being in the US, as directors of the UK company, one might be able to still make UK pension contributions and perhaps also withdraw some minor profits below UK/US taxable limits.

Anyone can continue to make contributions to an existing UK pension scheme for up to 100% of UK earnings in the year they leave and a maximum of £3,600 (regardless of UK earnings) for each of the 5 subsequent years. They won’t get any tax relief though unless the contributions were made from UK earnings subject to UK tax or derived from patents. They can continue to make voluntary NI contributions to boost the UK state pension. That may or may not make sense based upon their personal circumstances but is generally very worthwhile unless the maximum state pension will be achieved with existing and future contributions made from UK earnings. Recent threads have loads of information on that. The BTL won’t make any difference to the above.

The rental income will have to be declared on their US tax return and tax paid on any profit. The profit will likely be nil or small because of the generous expenses and depreciation allowed, and credit for any tax paid to the UK on that rental income. They will need to declare the rental income on a U.K. tax return as well. If the rental is put into an LLC which I assume is what you mean by a UK BTL then you may be making the tax situation more complex than it would otherwise be because of additional US reporting required and likely no tax benefit.

sell it or rent it out

If they are moving here permanently they should sell it before they move to avoid the US and UK capital gains taxes that will apply after they have left the UK. US capital gains will apply to all profits over $250K/$500K immediately and to all profits unless they have lived in the property for two of the prior 5 years, meaning that 3 years after leaving they will lose the $250K/$500K(single/married) exclusion. The UK taxes all profits since 2015. More information here https://www.gov.uk/tax-live-abroad-sell-uk-home. Not sure how converting it to a BTL company will change that but the reporting requirements and penalties for failing to correctly report foreign assets and companies in particular are quite onerous and something to seriously consider before going down that route.

They're presumably aware that if they decide to put it in a Ltd company then they will have to pay stamp duty on it (as well as the costs of setting up the company and annual running costs)? Depends on the property value of course but that could be quite costly.

I can't really see the point of it, or see that it would save them any money at all if that's the only property they'd have in the business. They can still pay themselves minor profits tax free anyway. A Ltd company for BTL's is a great way to save money if they had numerous properties, I can't really see the point in doing it just for one - think they'd need to do the sums very carefully but I can't see it saving them anything (and it may well cost them much more).

Dealing with a rental property can be annoying and time consuming. Dealing with one in another country, in another time zone, doubly so. ... Unless you farm out management to an agent, which will likely take a substantial chunk of the income (a percentage of gross rental, plus all the fees and charges the agent incurs on the landlord/owners behalf).

And you're asking if adding an additional layer of administration and expense, by incorporating a holding company, is a good idea?

Unless the owner is on a short secondment, three to five years tops, or has another interest in continuing to own the home, such as "keeping it in the family", the only logical decision, from a point of taxes, expenses and administration, not to mention personal stress and angst, is to sell the home ASAP after moving to the US.

Sell before move

There is a special US tax form that is required if you own a substantial portion of a foreign company. It's not necessarily any additional tax, but it is a bit more paperwork to deal with.

https://www.irs.gov/forms-pubs/about-form-5471

Thanks all for the responses, really helpful!
Didn't imagine most Brits in the US sell primary home before moving. For those renting it out, it also seems most are doing it in personal names and below tax thresholds.

Keeping taxes clean and simple seems the common thread. As a final push (sentimental value of not parting ways with their primary home, first house, kids born etc); any pointers to someone US/UK tax expert who can guide further on the decision?
The move to US is permanent for them but who knows maybe in 15yrs (post kids college etc) they might choose to retire in UK.

That is exactly what we did, moved back to England after retiring. We had sold our house shortly after moving to Texas and certainly no regrets in doing so.

I rented out my UK home for about 8 years when I left. Used an agent who took about 15% and it was well worth it to be completely hands off. It’s definitely doable and many do so. I sold it remotely without ever needing to go back. But if I could go back in time I would have sold it when I left.

If this is a permanent move then financially they will be a lot better off selling before they become a non resident for UK tax purposes, that way they avoid UK Capital Gains Taxes on the house sale which will tax all gains since 2015. Also, beware that tax will be due in the US on an annual basis on any profit which as previously stated will likely be low or zero because of depreciation, however when the property is sold all of that depreciation which significantly reduced the profit during the rental years will be taxed upon sale at ordinary income tax rates capped at 25%, plus state and perhaps city tax. So it’s not a free lunch, it’s tax deferral not tax avoidance. That plus the UK capital gains, and US capital gains due on all profit if they have not lived in the property for 2 out of the prior 5 years will take a huge chunk of their profit. (Only the higher of the UK or US federal taxes will be due which will likely be the US taxes in this case).

Emotionally, if this is a permanent move, they should also sell to cut ties with their old life and embrace the new. If their kids are raised here, especially in their teenage years, they will be unlikely to want to reside in the UK and if they do they are likely to want to start their own lives in their own property in an area of their choosing. If your friends retire back to the UK they may well want a different property in their retirement years, plus the emotional ties to a property dissipate after a few years, and certainly after it has been rented to many strangers who don’t always look after it the way you might like.

However you look at it, emotional or financial, if it is a permanent move they should sell before they become non residents for UK tax purposes which gives them a little time after they move to do so. Retaining the property for emotional reasons will almost certainly come at quite a financial cost.