UK Subsidiary Company: Branch, UK Establishment or New Ltd? The Foreign-Parent Decision Guide (2026)

A UK subsidiary company is a new private limited company (Ltd) registered at Companies House and owned by your existing foreign parent through shares. It is a separate legal entity. The alternative, a UK branch (officially a UK Establishment), is not separate at all. It is just your foreign company operating in the UK, with the parent carrying full liability.

If you already run a company abroad, such as a US LLC or a UAE company, this post answers one question: which structure gives you the right UK presence for your situation? The step-by-step mechanics of registering a UK Ltd are covered in detail in our guide on how to register a UK limited company step by step. This post is about the structural decision that comes before registration.

What Is a UK Subsidiary Company?

A UK subsidiary company is a private limited company registered at Companies House under the Companies Act 2006, where the parent holds a majority of the voting rights or otherwise controls the company. The parent controls it, but the subsidiary is its own legal person. It has its own company registration number, files its own accounts, enters contracts in its own name, and limits the parent’s exposure to the capital it invested.

Three terms worth distinguishing:

• Wholly owned subsidiary UK: the foreign parent holds 100% of the shares. No other shareholders.
• Majority-owned subsidiary: the parent holds a majority of the voting rights (or otherwise controls the company), and other shareholders exist.
• Minority stake: the parent owns less than half and has no control. This is not a subsidiary.

A subsidiary differs from a holding company in purpose. A holding company exists primarily to own shares in other companies and manage a group structure. A subsidiary is the operating entity the holding company controls. If you are thinking about the wider group structure, our post on setting up a holding company in the UK covers how the parent layer works.

And if your foreign parent is itself an LLC considering how to structure ownership across multiple entities, our post on whether your LLC can own a UK subsidiary walks through the multi-entity structures that actually work.

What Is a UK Branch (UK Establishment)?

A UK branch is registered at Companies House under the Overseas Companies Regulations 2009, not the Companies Act. It is not a separate legal entity. It is your foreign company operating in the UK under its own name and registration.

Key characteristics:

• The parent company is directly liable for everything the UK branch does. There is no liability wall.
• The branch uses the foreign parent’s name (though it can add a trading name).
• It must register at Companies House and file certain documents, including the parent’s accounts in some cases.
• It does not have its own share capital or shareholders — it is just an extension.
• HMRC taxes the UK profits of the branch as if they belong to the foreign company.
• An overseas company must register a UK establishment on form OS IN01 within 1 month of opening for business in the UK (gov.uk, checked 2 Nov 2026).

Branches are sometimes called UK Establishments, which is the technical Companies House term. Both words refer to the same thing: a registered overseas company presence that is not a separate entity.

UK Subsidiary vs UK Branch vs New UK Ltd: The Decision Table

Here is how the three main options compare for a foreign parent evaluating its UK entry options.

The standalone new UK Ltd column is included for completeness. If your foreign company wants to own the UK operation, that column does not apply — the choice is between the branch and the subsidiary.

Why Most Foreign Companies Choose a Subsidiary Over a Branch

The branch is simpler to set up on paper. It does not require share capital or a shareholder structure. But in practice, most foreign companies expanding to the UK choose a subsidiary. Here is why.

The liability wall

A subsidiary is a separate legal entity. If the UK operation takes on debt, faces a lawsuit, or fails, creditors cannot reach straight back to the parent’s assets. The parent’s exposure is capped at whatever it invested as share capital. A branch gives none of this protection: the parent is fully on the hook.

Banking access

Fintech providers such as Wise, Tide and Revolut generally expect a UK-registered company, usually a UK Ltd, subject to each provider’s checks. A branch (UK Establishment) is registered at Companies House, but it isn’t a UK company, so it usually has fewer options. For a full breakdown of what each provider wants, see our guide on the UK business bank account for non-residents.

Stripe and PayPal

Stripe UK and PayPal both expect a UK-registered entity. Stripe asks for UK company details at onboarding, and a UK Ltd is the most straightforward route. Stripe makes the final decision. See also our guide on setting up a UK limited company and using Stripe for international business. Launchese is not affiliated with Stripe.

Corporation tax treatment

A UK subsidiary pays corporation tax on its own profits at 19% (small profits rate, under £50,000) or 25% (over £250,000), with marginal relief in between. These limits are divided by the number of associated companies, so a foreign parent and its other companies count (gov.uk, checked 2 Nov 2026). A branch pays UK corporation tax on the UK profits attributable to the branch. The headline rates are the same, but the subsidiary’s tax position is ring-fenced from the parent’s. Transfer pricing rules apply when the parent and subsidiary transact with each other — if you are moving money between them, get advice on arm’s length pricing.

Credibility and contracts

A UK Ltd on invoices and proposals signals a regulated, incorporated entity to British customers. Some tenders and platforms explicitly require a UK-registered company. A subsidiary is a UK company, so it meets that requirement; a branch sometimes does not.

What the Parent Company Needs Before Registering

Almost any foreign company can own a UK subsidiary. Have these ready before you file.

• Certificate of incorporation of the parent company
• Articles of association (or equivalent governing document)
• Proof of the parent’s registered address
• Names and details of the parent’s own directors and ultimate beneficial owners

Since 18 November 2025, every new director and person with significant control, wherever they live, must verify their identity with Companies House and give their personal code. Existing directors give theirs with the company’s next confirmation statement. For the full process, see our guide on Companies House identity verification for overseas directors.

When you name the parent company as the shareholder (subscriber) on the incorporation form, you create the subsidiary relationship. For a wholly owned subsidiary, 100% of the shares go to the parent. The parent is not a Person with Significant Control in the same way an individual is — you report it as a “relevant legal entity” and then name the individuals who ultimately control the parent. The Person with Significant Control rules post walks through exactly who to list and how.

Registering the UK Subsidiary at Companies House

The registration process is the same as for any UK private limited company. The key difference is that the shareholder field names the foreign parent company rather than an individual. You provide the parent’s name, country of incorporation, and registration number.

What to know for 2026:

• Online incorporation fee: £100 (increased from £50 on 1 February 2026).
• You submit the company name, UK registered office address, director details, shareholder (the parent), and share structure.
• Companies House says online registrations are usually done within 24 hours.
• You receive a Certificate of Incorporation and a Company Registration Number (CRN).

A UK registered office address is required — it cannot be a PO Box or your overseas address. Launchese plans include formation and a London registered office address: see launchese.com/plans. For the full mechanics of what to submit and how, see how to register a UK limited company step by step.

Banking, Stripe and Payment Processing for the Subsidiary

Registration is only the start. A subsidiary with no bank account cannot trade. Handle these immediately after incorporation.

1. Open a UK business bank account. Use the Certificate of Incorporation and CRN to apply to a provider such as Wise, Tide or Revolut, subject to each provider’s checks.
2. Apply for Stripe UK or PayPal. A UK Ltd can apply; Stripe and PayPal make the final decision and check your website first, so make sure it is live and meets their requirements.
3. Register for Corporation Tax with HMRC. Mandatory within 3 months of starting to trade. See our guide on how to register for Corporation Tax in the UK.
4. Consider VAT registration. Compulsory when taxable turnover exceeds £90,000 per year. Voluntary registration can be worth it earlier if your customers are VAT-registered businesses who can reclaim it.

If one provider declines, another may accept you; see the banking guide for non-residents.

Ongoing Compliance for a UK Subsidiary

A UK subsidiary is inexpensive to maintain, but the obligations are real. Miss a deadline and Companies House charges late filing penalties.

• Confirmation statement: filed at least once a year to confirm company details are current. Fee: £50 online (Companies House fee from 1 Feb 2026).
• Annual accounts: filed at Companies House each year, within 9 months of the financial year end for a private company.
• Corporation Tax return: filed with HMRC, tax paid on profits. The subsidiary is taxed independently of the parent.
• VAT returns: usually quarterly if you are VAT-registered.
• Transfer pricing: if the parent and subsidiary transact (loans, services, IP licences), HMRC expects arm’s length pricing. This is the main extra compliance burden that a standalone Ltd does not have.

Launchese accounting covers accounts, the Corporation Tax return and the confirmation statement: see launchese.com/plans.

How Much Does It Cost to Set Up a UK Subsidiary?

Here is a 2026 cost breakdown using government fees.

Government fees checked on gov.uk on 2 Nov 2026.

Launchese can handle VAT registration with HMRC: see launchese.com/plans.

Frequently Asked Questions

Can any foreign company own a UK subsidiary?

Yes. A company formed abroad, such as a US LLC or a UAE company, can be the parent shareholder of a UK private limited company. The parent is named as the subscriber on the incorporation form, with its own registration number and country of incorporation.

Does the parent have liability for the subsidiary’s debts?

No. The subsidiary is a separate legal entity. The parent’s exposure is limited to the share capital it invested. This is the fundamental difference from a UK branch, where the parent carries full liability for everything the branch does.

Branch vs subsidiary: which is better for UK banking?

Subsidiary. Fintech providers such as Wise, Tide and Revolut generally expect a UK-registered company, usually a UK Ltd, subject to each provider’s checks. A branch (UK Establishment) is registered at Companies House but it isn’t a UK company, so it usually has fewer options. If banking and Stripe are on your list, a subsidiary is the more reliable route.

Do I need a UK-resident director for the subsidiary?

No. A UK private limited company needs at least one director, but there is no residency or nationality requirement. At least one director must be a person, not a company. Since 18 November 2025, every director must verify their identity with Companies House.

How is a UK subsidiary taxed compared to a UK branch?

Both pay UK corporation tax — 19% on profits under £50,000, 25% on profits over £250,000, with marginal relief between. These limits are divided by the number of associated companies, so a foreign parent and its other companies count (gov.uk, checked 2 Nov 2026). The subsidiary is taxed on its own profits as a separate entity. The branch is taxed on the UK profits of the foreign parent attributable to the branch. The rates are the same; the accounting and ring-fencing differ.

Can I convert a UK branch to a subsidiary later?

There is no direct conversion mechanism. The standard approach is to incorporate a new UK Ltd (the subsidiary) and transfer the business activities across from the branch, then close the branch registration. This involves legal and tax considerations, so take advice before doing it.