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Choosing a structure · 6 min read

Branch vs Subsidiary

A side-by-side of the two most common UK structures for overseas businesses — legal personality, tax, filing, exit and ongoing administration.

Branch vs Subsidiary — Setupinuk guide hero image

When an overseas company decides to formalise a UK presence it almost always chooses between a UK branch (a registered "establishment" of the overseas company) and a UK subsidiary (a separately incorporated Private Limited Company). They look similar from the outside; they are very different in law.

At a glance

Subsidiary (Ltd)

  • Separate legal entity, incorporated in the UK.
  • Limited liability — parent's exposure capped at paid-up share capital.
  • Subject to UK corporation tax on worldwide profits.
  • Files its own UK statutory accounts; may require a UK audit.
  • Profits taxed in the parent only when distributed as dividends.

Branch (UK establishment)

  • Not a separate legal entity — an extension of the overseas company.
  • The overseas parent is fully liable for the branch's debts and obligations.
  • Subject to UK corporation tax on the activities carried on by the branch.
  • Must file the parent's audited financial statements (translated into English) at Companies House.
  • No UK audit of the branch itself; no stamp duty on capital contributions.

Key trade-offs

  • Disclosure: a branch exposes the parent's full accounts publicly in the UK. A subsidiary discloses only its own.
  • Tax: a subsidiary ring-fences UK profits; a branch's profits sit inside the overseas company's worldwide tax position.
  • Set-up time: a subsidiary can be incorporated in hours; a branch registration typically takes 4–6 weeks.
  • Exit: a branch closes automatically on cessation of trade; a subsidiary requires a formal wind-up or strike-off (minimum 3 months).

Which should you choose?

If you are testing the market with a small team and limited commitment, a branch can be lighter. If you intend to hire, raise local investment, sign enterprise contracts, or protect the parent from UK liabilities, a subsidiary is almost always the right answer.

"Setting up a branch is often less ongoing administration; a subsidiary is a longer-term, more secure structure that adds credibility and commercial respectability."

Other structures

  • Limited Partnership (LP) — flexible, but at least one general partner carries unlimited liability.
  • Limited Liability Partnership (LLP) — separate legal personality, members' liability limited to capital.
  • Private company limited by guarantee — used by not-for-profits and member organisations.

Disclaimer

This guide is general guidance, current at the time of publication, and is not a substitute for tailored legal, tax or accounting advice. Setupinuk works alongside specialist counsel and accountants on every engagement.

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