Formation · 7 min read
Subsidiary or branch (UK establishment): how to choose
A UK subsidiary is a new limited company; a branch — registered at Companies House as a “UK establishment” — extends your existing overseas company into the UK. How they differ on liability, disclosure, set-up time, early losses and tax, and which one most groups should pick.
Key points
- A subsidiary is a separate UK limited company; a branch (“UK establishment”) is your existing overseas company operating in the UK and registered on form OS IN01.
- A subsidiary limits liability to the UK company and puts only its own accounts on the public register; a branch exposes the parent and usually puts the parent’s accounts on the UK register too.
- A subsidiary incorporates in a day; a branch takes weeks and needs certified, translated parent documents.
- The main argument for a branch is that early UK losses can often be relieved against the parent’s profits at home.
- A branch carries duties a subsidiary does not: every director of the overseas company must verify their identity and be confirmed on form OS VS01 by the anniversary of the establishment opening, changes must be filed within 21 days, and the company name and country of incorporation must be displayed at every UK location and on the website.
Two ways into the UK
An overseas company that wants to trade in the UK has two legal routes. It can form a subsidiary — a new UK private limited company that it owns — or it can register a branch. Companies House calls a branch a “UK establishment”, and the overseas company registers it on form OS IN01 within one month of opening a place of business here. The name of this site is a nod to that term; most of our clients, though, end up with a subsidiary.
Side by side
| Subsidiary | Branch (UK establishment) | |
|---|---|---|
| Legal identity | A separate UK company | Your existing company, operating here |
| If something goes wrong | Exposure limited to the UK company’s assets | The parent is directly liable |
| On the UK public register | The UK company’s accounts only | The parent’s constitution and, usually, its accounts |
| Set-up | Incorporated in 24–48 hours | Weeks, with certified and translated documents |
| Early losses | Stay in the UK company, carried forward | Often usable against the parent’s profits at home |
| UK customers contract with | A UK company | Your overseas entity |
| UK corporation tax | On the UK company’s worldwide profits | On profits attributable to the UK establishment |
| Closing down | Strike-off or liquidation | Deregister the establishment |
Liability
A subsidiary is a separate legal person. If the UK business fails or is sued, the parent’s exposure is normally limited to what it invested in the UK company. A branch has no such wall: the overseas company is the party to every UK contract and every UK claim.
What goes on the public register
A subsidiary files its own accounts at Companies House — and small companies can file abridged accounts. A UK establishment must file the overseas parent’s constitutional documents (with certified translations if not in English) and, in most cases, the parent’s own accounts every year. Many groups find that alone decides it.
Set-up time and paperwork
A subsidiary is incorporated online in 24–48 hours once the directors have verified their identity. A branch registration needs certified copies of the parent’s constitution, details of its directors and secretary, the latest accounts, and translations — realistically two to six weeks, and more if documents must be legalised.
Tax
Both pay UK corporation tax at the same rates (25%, or 19% on small profits with thresholds divided across the group). A subsidiary is taxed on its own profits; a branch on the profits attributable to the UK establishment, which needs a transfer-pricing style attribution. The UK charges no withholding tax on dividends from a subsidiary to its parent, in any country. Profits of a branch simply belong to the parent — no dividend needed. The one structural advantage of a branch: early-year UK losses can often be set against the parent’s profits at home, depending on the home country’s rules. A subsidiary’s losses stay in the UK and are carried forward.
VAT, payroll and banking
Both routes can register for UK VAT and PAYE. In practice banks find a UK company far easier to onboard than a foreign entity’s branch, and UK customers and landlords prefer to contract with a UK company. Revolut Business, our default banking route, is designed for UK-incorporated companies.
So which one?
A subsidiary, in most cases. The exceptions are groups that expect UK losses for several years and can use them at home, regulated businesses whose home licence must be the contracting entity, and situations where the parent is happy for its accounts to be public in the UK anyway. If any of those describe you, the branch is worth a proper conversation before you decide.
Already picked the wrong one?
It happens. A branch can be replaced by a subsidiary — the business is transferred and the establishment deregistered — and a dormant subsidiary that was never needed can be struck off. Both are routine; we quote them as one job.
This guide is general information for overseas businesses considering the UK, correct to the best of our knowledge at the date shown. It is not advice for your specific circumstances — rules and thresholds change. Check with us or HMRC before acting on it.