How to set up a subsidiary in the UK: A practical guide for overseas businesses

Expanding into the UK through a subsidiary is an exciting step that can give your business greater control, credibility and access to a major international market. But getting the structure right from day one is vital. A properly formed subsidiary not only supports banking and governance decisions, but it also helps limits liability, streamlines tax reporting and makes future growth easier.

This practical guide explains each stage of setting up a UK subsidiary - choosing between a branch, a subsidiary or an employer-of-record structure, appointing the right directors, completing incorporation documents, preparing governance and meeting your ongoing filing obligations.

Our team supports businesses at every stage of UK entry, from structuring the right legal entity to setting up governance, hiring safely and protecting your data. We act as an integrated UK legal partner, coordinating across tax, banking and employment to give you one clear plan and one point of legal contact.

Ready to launch your UK business with confidence? See how we can help you set up a UK subsidiary, giving you a scalable, compliant base.

Step 1: Decide whether you need a subsidiary rather than a branch or employer of record

It’s important to confirm the legal route before moving forward. Setting up a UK subsidiary creates a separate legal entity, which gives you a clean counterparty for contracts and makes liability clearer. A UK establishment (branch/place of business), on the other hand, is simply the overseas company operating in the UK and needs to be registered once there’s a physical presence carrying on business. If you decide to open a UK establishment, you’ll need to register it with Companies House within one month of opening, using form OS IN01. The current fee is £71.

An employer of record works differently. It’s a service model for hiring and doesn’t create a separate legal entity.

The route you pick determines who signs contracts, who is on the hook if something goes wrong, and how straightforward bank onboarding will be.

Step 2: Align ownership directors and people with significant control

It’s usually best to have the parent company as the shareholder, unless there’s a specific reason to bring in an intermediate holding company. When appointing directors, make sure they’re people who can make decisions and understand any group approval processes. They don’t need to be based in the UK. Discover everything you need to know in our practical guide about how to appoint a board of directors.

You also need to identify anyone with significant control over the company (known as a PSC – person with significant control). In practice, this means anyone who owns more than 25% of the shares or voting rights, or anyone who otherwise has a major influence, and make sure their details are recorded accurately. It’s important to keep this information up to date - update the company register within 14 days of any change and then notify Companies House within a further 14 days.

From 18 November 2025, companies will no longer keep a local PSC register; you must keep PSC information up to date directly with Companies House. For more information, read our Companies House ID changes update.

Clean ownership and PSC data reduces Companies House queries and shortens bank due diligence, and it gives your auditors a clear picture of control.

Step 3: Choose a name, select your SIC code and decide on Articles

Make sure to run checks on your chosen company name to avoid anything identical or too similar to existing names and check for any sensitive words that need approval. Pick a SIC code that reflects day-one activity (you can select up to 4). You can update SIC codes later, typically when filing your confirmation statement.

You’ll also need to decide whether to use the standard model Articles or create a bespoke set. Custom Articles can help align reserved matters, share classes, and transfer restrictions with your wider group policies. You can find out more in our articles of association FAQ guide.

Getting the name right is often the biggest reason applications are rejected, SIC codes affect how others classify your business, and Articles act as the rulebook to keep board decisions predictable and in line with group governance.

Step 5: Assemble the incorporation information before you file

Bring together all the key data and documents into a single pack. You’ll need the company name, registered office and email, the lawful purpose statement, details of directors and PSCs, shareholder information and statement of capital, your SIC code, and the Articles you’ve chosen. Once everything is ready, you can file online through Companies House.

We’ve compiled a list of all your corporate law priorities in our guide.

Gathering IDs and decisions up front helps reduce back-and-forth and keeps the process moving smoothly across teams.

Step 6: Decide where statutory records will be kept and set them up

Decide whether you’ll keep your company records at the registered office or at a Single Alternative Inspection Location within the same UK jurisdiction. Even though more reliance is now placed on verified Companies House data, you still need to maintain a local register of members at your chosen location.

Keeping your records organised makes bank and auditor enquiries quicker and also makes future due diligence easier if you plan to raise capital or sell the business.

Step 7: Get bank ready the legal elements

Be prepared for the bank to carry out due diligence on the company as well as on directors and PSCs. You’ll need certified incorporation documents, ID for controllers, and, if the bank asks, a short legal letter confirming authority and the group structure.

Having a complete and accurate pack can turn what would be a series of follow-ups into a single, smooth process, so you can start receiving and making payments sooner.

Step 8: Put a simple governance pack in place for the board

Once directors are appointed, they need to act within their powers, promote the company’s success, use independent judgment and reasonable care, avoid conflicts, and declare any interests. It’s helpful to put together a practical pack that includes board and shareholder minute templates, a conflicts policy, and a delegated authority matrix aligned with the parent company’s approval levels.

Clear guidance on who can sign what helps avoid delays in sales and procurement and provides a reliable audit trail if decisions are ever reviewed. For more comprehensive governance support, you can refer to our corporate governance service.

Step 9: Document intercompany services and IP use

Set up a services or management agreement and, if the UK company will be using group technology or branding, an IP or brand licence. Your tax advisers can help set pricing and confirm the transfer pricing position, and the contracts should reflect this approach and show real substance.

If you want to learn more, including how to develop a robust supply of services agreement, read our article.

Auditors, HMRC, and investors regularly ask to see these documents, so getting them in place early removes a common source of delays and friction.

Step 10: Cover employment basics before first hires

Before employees start, make sure you issue written terms by day one of starting work, complete right-to-work checks, and put in place disciplinary and grievance procedures that follow the ACAS Code. If you’re planning to relocate people to the UK, you’ll usually need a sponsor licence before you can assign Certificates of Sponsorship. For more details, see our guide to the sponsor licence process.

These steps are straightforward but help prevent unnecessary disputes and keep your hiring timelines on track.

We cover right to work checks in more detail, helping you prevent illegal working.

Step 11: Build privacy and international data transfer compliance

Start by mapping the data you’ll be processing, choose the correct lawful bases, and publish a clear privacy notice. Most organisations also need to pay the ICO data protection fee unless they’re exempt. If you plan to transfer data out of the UK, use the International Data Transfer Agreement or the UK Addendum to the EU standard contractual clauses.

Addressing privacy early makes customer security reviews much smoother and helps you avoid last-minute rushes.

Unsure if you need a privacy notice? This guide explains when your business needs a privacy policy.

Step 12: Diary the ongoing filings and keep everything current

Make sure you plan ahead for your annual confirmation statement, which now includes the registered email and a confirmation of the company’s lawful purpose. File your accounts by the deadline for your company type and accounting reference date. You should also make event-driven filings promptly for changes like director appointments or resignations, share allotments, registered office updates, and PSC changes.

Keeping up with filings on time helps protect your credibility with banks, investors, and other counterparties. If you’d rather leave the routine tasks to someone else, our team can maintain registers and handle the filings for you.

We offer streamlined company secretary management, helping you stay focussed on running your businesses without spending time on unnecessary admin.

Legal essentials when expanding into the UK

Expanding into the UK comes with several important legal tracks that need to move together so your business can trade, hire and scale without friction. Our guide to the legal requirements for expanding into the UK walks you through the many considerations to be aware of.

Need help setting up?

We act as an integrated legal partner for market entry - stitching together entity set-up, governance, people, contracts, IP, data and (where relevant) regulation, working alongside your tax, banking and payroll teams. One plan, clear owners, sensible sequencing.

Want the fuller picture? Our Setting up a UK business service explains how we support your launch and ongoing compliance and growth.