How to Register a Subsidiary of a Foreign Company in the UK

Expanding into the UK is a major milestone for any international business. Whether you’re entering the British market for the first time or establishing a European base, setting up a UK subsidiary company offers flexibility, credibility, and control. It allows overseas owners to operate under a familiar legal framework while benefiting from the UK’s stable economy, skilled workforce, and favourable corporate environment.

In this post we’ll look at how to register a subsidiary of a foreign company in the UK. You’ll learn the key legal requirements, step-by-step registration process, and ongoing compliance obligations under UK company law.

We’ll also highlight important differences between a UK branch and a subsidiary, explore tax and reporting responsibilities, and provide expert guidance to help you establish your UK presence correctly from day one.

1. Understanding What a UK Subsidiary Is

A subsidiary is a company that is legally separate from its parent organisation but controlled or owned by it – usually through share ownership. This means that while the parent retains strategic control, the subsidiary operates as its own legal entity within the UK.

Most overseas businesses choose to establish their UK subsidiary as a private limited company (Ltd). This structure allows the foreign parent company to hold all or most of the shares while ensuring that the subsidiary remains independent in law, taxation, and operations.

Key features of a UK subsidiary:

• It is incorporated in the UK under the Companies Act 2006.
• It receives its own company registration number, and must maintain separate bank accounts and tax records.
• It can independently enter contracts, own property, and employ staff.

This structure differs from a UK branch, which is not a separate legal entity but an extension of the foreign parent. A branch’s liabilities, accounts, and tax responsibilities remain directly tied to the overseas parent company.

Expert Tip: Subsidiaries are often preferred over branches because they limit the parent company’s liability and offer greater flexibility for UK accounting, taxation, and corporate governance.

For official definitions and comparisons, see GOV.UK – Set up a UK business for overseas companies.

2. Benefits of Setting Up a UK Subsidiary

Establishing a UK subsidiary company can deliver a wide range of strategic and operational advantages for overseas businesses looking to enter or expand within the British market. From risk management to market credibility, the benefits make this structure one of the most popular routes for foreign companies operating in the UK.

• Limited liability protection – the subsidiary is a separate legal entity, meaning the parent company is protected from UK-specific debts, contracts, or legal claims.
• Tax efficiency – the subsidiary is treated as a UK tax resident company and pays Corporation Tax on its UK profits. However, it may benefit from the UK’s extensive network of Double Taxation Treaties, which help avoid being taxed twice on the same income.
• Enhanced credibility and local presence – operating as a UK-registered company builds trust with clients, suppliers, and financial institutions. It signals a long-term commitment to the UK market and compliance with Companies House standards.
• Access to UK banking and finance – subsidiaries can open UK business bank accounts, apply for credit, and qualify for local grants or funding programmes that may not be available to overseas branches.
• Operational autonomy – the subsidiary can make independent business decisions tailored to the UK market, without requiring parent company approval for day-to-day management.

Expert Tip: A UK subsidiary helps build long-term confidence with regulators, customers, and investors who prefer dealing with UK-registered entities governed by domestic law and accounting standards. It’s also a key step for international companies looking to establish a trusted local brand presence.

3. Steps to Register a UK Subsidiary

Setting up a UK subsidiary company involves following several key steps to meet Companies House and HMRC requirements. Below is a detailed guide to help overseas businesses complete the process correctly from start to finish.

Step 1: Choose a Company Name

Your subsidiary’s name must be unique and comply with Companies House naming rules. Avoid restricted terms, sensitive words, or names that are too similar to existing companies registered in the UK.

Use the Companies House name availability checker to confirm your chosen name before registering.

Step 2: Decide on the Registered Office Address

Every UK company must have a registered office address located in the UK. This is the official address where all statutory mail from Companies House and HMRC is sent.

• The address must be within the same jurisdiction of registration – England & Wales, Scotland, or Northern Ireland.
• It must be a physical address (not a PO Box) where official correspondence can be delivered.

You can use a professional registered office service from Formations Wise to protect your privacy and ensure all legal mail is handled promptly and securely.

Step 3: Appoint Directors and Shareholders

Each subsidiary must have at least one director (an individual, who does not need to be a UK resident) and at least one shareholder. In most cases, the foreign parent company will hold all or most of the shares.

You’ll need to provide the following details during incorporation:

• The parent company’s full legal name, registered address, and country of incorporation.
• Each director’s full name, nationality, date of birth, occupation, and service address.

Directors must comply with their duties under the Companies Act 2006, even if they are based overseas.

Step 4: Define Share Capital and Ownership Structure

Most UK subsidiaries are incorporated with a nominal share capital (for example, £100 divided into 100 ordinary shares). The shares can be owned entirely by the foreign parent or split between several corporate shareholders within a group.

Expert Tip: Always ensure your ownership and capital structure align with your international tax strategy and comply with both UK and home-country reporting rules. Consulting an accountant or corporate tax specialist can help optimise this setup.

Step 5: Prepare Incorporation Documents

To register your subsidiary, you’ll need to file specific incorporation documents with Companies House, including:

• Form IN01 – Application to register a company.
• Memorandum and Articles of Association – outlining your company’s internal rules.
• Full details of directors, shareholders, and your registered office address.

You can file these documents online via the Companies House incorporation service or through an authorised company formation agent such as Formations Wise.

Step 6: Register for Corporation Tax

Within three months of starting business activities, your subsidiary must register for Corporation Tax with HMRC. You can do this online through the HMRC Company Tax Registration Service.

If the company will employ staff, you’ll also need to:

• Register as an employer for PAYE.
• Set up a UK business bank account for paying salaries and taxes.

Step 7: Apply for VAT (If Required)

If your subsidiary’s taxable turnover exceeds the current VAT registration threshold (£90,000 for 2025/26), you must register for VAT with HMRC. Even if you’re below the threshold, voluntary registration can imp_